Energy bills unlikely to fall in the medium term, Ofgem warns
Energy bills unlikely to fall in the medium term, Ofgem warns
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Updated on 30 May 2024
Energy bills aren’t expected to decline over the decade
Households will pay £1,568 per year from July
The cost of energy is a key election campaign issue
Ofgem heads backs more support for struggling households
Energy prices have become a key campaign issue in the upcoming general election
UK households are unlikely to see a fall in their energy bills over the next 10 years, according to Mark McAllister, chair of Ofgem.
Speaking to the Financial Times McAllister put this down to the costs of building out the electricity network to help support the shift to renewables, warning that he expects bills to be “relatively flat in the medium term”.
He also said he backed more targeted support for households struggling with their bills.
“As we build in more and more renewables, we’re also building in the price, amortised over many years, of the networks as well,” he explained.
“If we look at the forecasts for wholesale prices and then build on top of that the costs of the network going forward, I think we see something in our view that is relatively flat in the medium term.”
Earlier in May, Ofgem announced that from 1 July to 30 September, gas prices will be capped at 5.48p per kilowatt hour (kWh) and electricity at 22.36p per kWh. The cap does not apply to households in Northern Ireland, but prices are in decline.
Households using a typical amount of energy and paying by direct debit for dual gas and electricity would pay £1,568 per year, from 1 July. This is a fall of £122 compared to the annual bill on charges between April and June.
Users who pay their bills every three months by cash or cheque will pay more, an average of £1,668 per year.
However, the cost of energy is a key campaign issue ahead of the 4 July election, with both the Conservative and Labour parties claiming they will try to bring bills down.
Energy prices are down by more than 60% since January 2023, which was the peak of the energy crisis, thanks to surging wholesale costs, fuelling inflation and a cost-of-living crisis as a result of Covid-19.
The National Grid said it would invest more than £30bn (£1bn) in electricity networks over the next five years, with chief executive John Pettigrew recording a “single-digit pound impact” on network costs on bills would be offset by the wholesale cost benefits of building renewables.
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Tamara BirchSenior Writer
Tamara is a London-based journalist and has written about environmental topics for more than four years. This includes advising small business owners on cost-effective ways, like solar panels and energy-efficient products, to help them become more sustainable.
She has used her journalist and research skills to become highly knowledgeable on sustainable initiatives, issues, and solutions to help consumers do their bit for the environment - all while reducing monthly costs.
In addition to adopting sustainable practices in her personal life, Tamara has worked in the retail B2B space to help independent retailers think about their environmental choices and how they can help improve their business. She now uses this knowledge to help consumers do the same.
Her passion for sustainability and eco-friendly solutions stems from a long obsession with nature and animals and ensuring they feel looked after. In her free time, Tamara enjoys reading fantasy novels, visiting the gym, and going on long walks in new areas.
You can get in touch with Tamara via email at tamara.birch@mvfglobal.com.
Max joined The Eco Experts as content manager in February 2024. He has written about sustainability issues across numerous industries, including maritime, supply chain, finance, mining, and retail. He has also written extensively for consumer titles like City AM, The Morning Star, and The Daily Express.
In 2020, he covered in detail the International Maritime Organisation’s (IMO) legislation on sulphur emissions and its effects on the global container shipping market as online editor of Port Technology International.
He also explored the initiatives major container ports and terminals have launched in order to ship vital goods across the world without polluting the environment.
Since then, he has reported heavily on the impact made by environmental, social, and governance (ESG) practices on the supply chain of minerals, with a particular focus on rare earth mining in Africa.
As part of this, in 2022 Max visited mines and ports in Angola to hone in on the challenges being faced by one of the world’s biggest producers of rare earth minerals.
His most recent sustainability-related work came much closer to home, as he investigated the eco-challenges faced by independent retailers in the UK, specifically looking at how they can cut emissions and continue to thrive.
Max lives in South London and is an avid reader of books on modern history and ghost stories. He has also recently learned to play the game Mahjong and takes every opportunity to do so. He is also yet to find a sport he doesn’t enjoy watching.
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