Energy bills are projected to decrease slightly in January, with a potential subsequent increase in the spring, as per analysts at Cornwall Insight. They anticipate that the Ofgem energy price cap, currently at £1,755 annually for the average household paying via direct debit, will drop to £1,733, marking a £22 reduction. Ofgem is set to reveal the January price cap this Friday, attributing the expected decline to a minor decrease in wholesale energy prices. However, Cornwall Insight foresees a potential £75 yearly rise in the price cap come April.
Craig Lowrey, principal consultant at Cornwall Insight, cautioned that while the dip in January’s price cap may seem positive, it only paints a partial picture. Bill levels remain significantly above pre-crisis levels, and they are poised to climb again in April, driven not by higher wholesale prices this time.
The anticipated April increase is largely due to escalating charges linked to maintaining the country’s energy networks, particularly electricity transmission and gas distribution expenses. Lowrey emphasized that transitioning to renewables will offer long-term stability and energy independence but comes with tangible upfront costs that are reflected in current bills. Balancing short-term affordability with long-term resilience is essential, along with ensuring that individuals understand the significance of this trade-off.
The price cap does not impose a limit on total energy expenses but restricts the amount paid for gas and electricity unit rates, as well as standing charges. Standing charges are 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. The regulator disclosed that 1.9 million closed energy accounts still hold funds, including accounts of individuals who relocated in the last five years and have not been contacted by their previous supplier.
Ofgem estimates that some individuals could reclaim over £100, while others might only be owed a few pounds. Energy suppliers are mandated 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 returned. If there is a suspicion of being owed money, checking for final bills in letters and emails from the previous supplier is advised.
