British households could see their energy bills fall nearly 16% by spring as prices continue to ease from crisis levels, bringing relief to homes with stretched budgets.
Regulator Ofgem’s annualized price cap is likely to be £1,620 ($2,061) by April, a £308 decrease from January bills of around £1,928, with prices expected to continue to fall throughout the year, according to estimates from consultancy Cornwall Insight.
Wholesale energy prices have dropped since mid-November, which is likely to trigger the fall in price cap, the consultancy said in a note on Monday. The Ofgem price cap represents an annual bill for a typical household and reflects wholesale power and gas prices.
However, the consultancy ruled out any imminent fall in prices to pre-crisis levels.
“Though recent trends hint at possible stabilization, a full return to pre-crisis energy bills isn’t on the horizon,” Craig Lowrey, principal consultant at Cornwall Insight said. “Shifts in where and how Europe sources its gas and power, alongside continued market jitters over geopolitical events, mean we are likely still facing costs hundreds of pounds above historical averages for a while.”
Prices are much lower than the peaks seen last winter — when the government stepped in to subsidize bills — but remain more than 50% above historic levels, keeping a strain on consumers hit by a cost-of-living because most UK government support ended in 2023.
Ofgem reported in December that customer debt by the autumn of 2023 had ballooned to £2.9 billion.
Separately, the conflict in the Middle East and the shipping disruptions that followed have so far had muted impact on the market, Lowrey added.
“Healthy energy stocks and a positive supply outlook are keeping the wholesale market stable.”