Annual energy bills predicted to fall by £22 in January

Household energy bills are expected to fall slightly in the new year, according to consultancy Cornwall Insight.

The forecaster, widely respected for the accuracy of its predictions, expects homes using a typical amount of gas and electricity will pay £1,733 from January.

That would be a decrease of £22 per year, or 1%, from the current £1,755 price cap for a typical household’s annual energy bill.

But Dr Craig Lowrey, principal consultant at Cornwall Insight, warned the decrease is “only part of the picture”, with bills set to climb again in April.

“This time, it’s not higher wholesale prices driving the rise,” he said.

“The government pledged to lower bills on the promise that investment in renewables would reduce our reliance on global energy markets and stabilise bills.

“But what we’re seeing now is a shift, wholesale prices are no longer the main story. The real pressure is coming from rising non-energy costs, with levies and policy decisions associated with that investment in renewables driving up bills.”

Regulator Ofgem will announce the latest price cap – the maximum amount suppliers can charge customers for average energy usage – at the end of November.

The energy price cap covers around 22 million households in England, Wales and Scotland and is set every three months by Ofgem.

It is based on the cost of each unit of energy, not the total bill – so those who use more energy, pay more.

Ofgem’s price cap hit a record high in January 2023 of £4,279 as energy prices spiralled in response to the easing of Covid restrictions and Russia’s full-scale invasion of Ukraine. The government’s energy price guarantee shielded consumers from the soaring cost, replacing the price cap and limiting average annual bills at £2,500 for a typical household.