Energy bills are projected to decrease slightly in January before potentially increasing again in the spring, according to experts. Analysts at Cornwall Insight anticipate that the Ofgem energy price cap for the average household paying by direct debit will drop from £1,755 annually to £1,733, representing a £22 reduction.
The expected decline in the January price cap is attributed to a minor decrease in wholesale energy prices, which will be officially announced by Ofgem this Friday. However, Cornwall Insight forecasts a potential rise of approximately £75 per year in April.
Craig Lowrey, principal consultant at Cornwall Insight, highlighted that while the dip in the price cap for January may seem positive, it is only a temporary relief as bills remain significantly higher than pre-crisis levels and are expected to climb again in April due to increased charges associated with maintaining the country’s energy networks.
Lowrey emphasized that the transition to renewable energy sources is essential for long-term stability and independence but comes with upfront costs that are currently reflected in bills. Balancing short-term affordability with long-term resilience is crucial, along with ensuring that consumers understand the importance of this trade-off.
The price cap does not restrict the overall energy costs but limits the charges for gas and electricity unit rates along with standing charges. Standing charges cover the connection to the grid, and Ofgem recently urged nearly two million households to check if they are owed £240 million in unclaimed energy credit from closed accounts.
Ofgem estimates that some individuals could be entitled to over £100 in refunds, while others may receive smaller amounts. Energy suppliers are mandated to issue final bills within six weeks of an account closure and refund any due amount within ten working days. Over 90% of closed account balances are automatically returned, but consumers are advised to check for final bills and contact their previous supplier if they suspect owed money.