UK Anticipates a 16% Decrease in Energy Bills in April

powerlines

LONDON -

Households in Great Britain are set to experience a significant reduction in energy costs this spring, with bills projected to drop by over £300 annually. This decrease is primarily due to a decline in wholesale gas prices, offering some respite to those grappling with the cost of living crisis.

Cornwall Insight, a well-regarded industry analyst, predicts a 16% reduction in average bills from the previous quarter, potentially reaching the lowest levels since the onset of the Ukraine conflict.

The industry’s price cap, indicative of the average annual bill for a typical household, is expected to decrease from the current £1,928, set earlier this month, to £1,620 in April – a reduction of £308 and £40 less than previously forecasted in December.

Concerns about escalating tensions in the Red Sea, where Houthi rebels have disrupted global shipping, initially led analysts to fear an increase in wholesale oil prices and subsequent impact on household energy costs.

Contrary to these concerns, oil prices have remained relatively stable, and European gas reserves have been higher than anticipated during a mild winter, resulting in a drop in prices since November.

Cornwall Insight anticipates that energy prices will continue to be comparatively low through 2024. They predict a further decline to £1,497 for a typical annual bill from July, followed by a slight increase to £1,541 starting in October.

This forecast is a welcome development for Britons who have been dealing with increased expenses across various sectors, from food to utilities, amidst persistently high inflation rates.

Energy bills saw a steep rise in 2021, which escalated further due to the Ukraine conflict in 2022, driving up wholesale gas prices. This surge prompted government intervention to subsidize bills, capping costs to a typical household at £2,500.

Cornwall Insight noted that the supply of liquified natural gas to Europe had not been as adversely affected by the Red Sea disruptions as initially feared. Moreover, the UK has been well-supplied with gas from the US, which has become a more significant supplier since the Ukraine war. Contributing factors also include lower gas prices in Asia, mild weather, and robust gas availability.

Craig Lowrey, a principal consultant at Cornwall Insight, remarked that concerns about Red Sea events driving up energy prices have not materialized, allowing households to expect a reduction in prices.

On Monday, the next-month wholesale gas price dropped by 4% to 65p a therm.

However, Lowrey cautioned that a complete return to pre-crisis energy bill levels remains unlikely due to ongoing market impacts from shifting away from Russian energy sources and persistent geopolitical tensions.

Richard Neudegg, director of regulation at Uswitch, welcomed the potential further reduction of the price cap in April. However, he pointed out that this offers little solace to households currently struggling with high energy costs during the winter. Neudegg urged Ofgem, the energy regulator, to prompt suppliers to reintroduce more competitive and affordable fixed-price deals.

Related News

french-diesel-prices-return-to-pre-ukrainian-conflict-levels

Diesel Prices Return to Pre-Ukrainian Conflict Levels

FRANCE - In a significant development for French consumers and businesses alike, diesel prices in France have recently fallen back to levels last seen before the Ukrainian conflict began. This drop comes as a relief to many who have been grappling with volatile energy costs and their impact on the cost of living and business operations. The return to lower diesel prices is a noteworthy shift in the energy landscape, with implications for the French economy, transportation sector, and broader European market.

Context of Rising Diesel Prices

The onset of the Ukrainian conflict in early 2022 triggered a dramatic increase…

READ MORE
bucket truck workers

Texas utilities struggle to restore power as Harvey hampers progress

READ MORE

Brazil tax strategy to bring down fuel, electricity prices seen having limited effects

READ MORE

Mayo Schmidt

NEW Hydro One shares down after Ontario government says CEO, board out

READ MORE

ev building charging

How vehicle-to-building charging can save costs, reduce GHGs and help balance the grid: study

READ MORE