Household energy bills are set to fall by an average of £500 from July, according to experts at a leading market analyst firm.
Currently, the cap for typical usage stands at £3,280, but does not apply to bills as it is higher than the government’s separate price guarantee. This limits the annual average for bills at £2,500 to help ease the effects of the cost of living crisis, after wholesale energy prices spiked following Russia’s invasion of Ukraine.
However, Cornwall Insight, which provides energy market intelligence and analysis, forecasts that it will drop to £2,053 a year from July onwards.
According to Forbes, if the new cap falls below the level of the government guarantee, suppliers will have to ‘set their prices at or below the cap level, raising the prospect of lower bills than at present from July onwards’.
It is believed market regulator Ofgem will reveal the latest price cap, covering the period from July to the end of September, on Thursday 25 May.
July will mark the first time that the price cap has dropped below the level of the government guarantee, as well as the first time consumer bills have decreased in the last two years and nine months.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “As many people continue to suffer from the cost-of-living crisis, this will hopefully bring some cautious optimism that the era of exceptionally high energy bills is behind us."
But despite some sights of hope for consumers, bills will still remain higher than pre-crisis levels – with the price cap in October 2020 standing at just £1,042 a year.
“Those hoping to see a return to the kinds of bills seen at the start of the decade will be disappointed. Regrettably, it looks as if these prices may become the new normal,” Lowrey said.
The government announced it would be extending the household energy scheme to June back in March, with finance minister Jeremy Hunt saying Britain would maintain a price guarantee that would keep average annual bills at £2,500 for an extra three months.
"High energy bills are one of the biggest worries for families, which is why we’re maintaining the energy price guarantee at its current level," Hunt said.