In some rare good news for UK households, the price cap for domestic energy is expected to fall by 14% in April.
According to Cornwall Insight – an independent research company – the average annual household energy bill could fall to £1,660 in April, £268 less than the current annual bill of £1,928 a year (at January’s prices).
This is welcome news, as the price cap increased by 5% this month compared to October 2023, spelling a difficult start to the winter for many.
If the Cornwall Insight estimates are correct, the price of electricity, currently 28.62p per kilowatt hour (kWh), could fall to 24.09p per kWh in April. Gas could go from 7.42p per kWh to 5.96p per kWh.
Energy prices are expected to fall even further in July, going down to £1,590 a year, before increasing slightly to £1,640 in October, with average energy bills still £288 lower in October than in January.
Predicted energy prices* | April-June | July-September | October-December |
|---|---|---|---|
Annual energy bill | £1,660 | £1,590 | £1,640 |
Electricity (p/per kWh) | 24.09 | 22.56 | 23.72 |
Gas (p/per kWh) | 5.96 | 5.74 | 5.84 |
*Source: Cornwall Insight
Wholesale energy prices decreased sharply in November 2023, and the lower prices are likely to be reflected in household bills come April, according to Cornwall Insight.
Additionally, a relatively mild start to the winter has meant that Europe’s gas storage levels are higher than expected, providing more security from potential disruptions in the energy pipeline.
However, nothing is set in stone, and energy prices could surge again. As Dr Craig Lowrey, a principal consultant at Cornwall Insight, puts it: “the wholesale energy market is highly volatile, and unexpected global events can lead to spikes in energy prices.”
For example, recent attacks by Houthi rebels from Yemen on Suez Canal-bound commercial ships in the Red Sea had caused concerns of another potential spike in energy prices, as oil and gas-bearing ships may have been forced to reroute around Africa.
To avert a crisis and secure this important shipping lane, the US is leading a naval coalition to protect ships from further attacks, but the situation is still evolving.
All being good, British consumers should enjoy a brief respite from the high energy costs that have been hammering household budgets since Russia invaded Ukraine in February 2022.
