Energy bills are anticipated to decrease slightly in January before potentially increasing in the spring, according to industry experts. Cornwall Insight analysts project that the Ofgem energy price cap, currently at £1,755 annually for a typical household paying through direct debit, will drop to £1,733, resulting in a £22 decrease.
The official announcement of the January price cap adjustment by Ofgem is expected this Friday. The projected decrease is attributed to a minor decline in wholesale energy costs. However, Cornwall Insight forecasts a potential £75 annual increase in the price cap come April.
Craig Lowrey, principal consultant at Cornwall Insight, emphasized that while the January price cap reduction may seem positive, it is only a partial view. He highlighted that energy bills remain significantly higher than pre-crisis levels and are likely to rise again in April due to factors other than increased wholesale prices.
The anticipated April increase is primarily driven by escalating charges related to the maintenance and operation of the country’s energy networks, particularly electricity transmission and gas distribution expenses. Lowrey underscored that transitioning to renewables will bring long-term stability and energy 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 consumers understand the importance of this trade-off.
The price cap does not impose a limit on the total energy expenditure but restricts the unit rates for gas and electricity, along with standing charges. Standing charges are the fees for grid connection. Ofgem recently urged nearly two million households to check if they are eligible to reclaim £240 million in overlooked energy credit, as 1.9 million closed energy accounts still hold unclaimed funds. Ofgem estimates that some individuals could be entitled to over £100, while others might receive only a small refund. Energy suppliers are obligated to issue final bills within six weeks of an account closure and refund within ten working days.
Over 90% of closed account balances are automatically refunded. Consumers who suspect they are owed money should review final bills sent by their previous supplier and reach out to claim any outstanding funds.