Energy prices have been well-above historical averages for more than two years. But, is better news on the way?
At the start of 2024, energy bills went up by 5% compared to the previous Ofgem energy price cap. It meant the average household's annual energy bill would come in at £1,928 a year - £94 more than it would have under the October to December cap.
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Your actual gas and electricity bill is determined by how much energy you use. Per kilowatt hour (kWh) unit prices and standing charges are capped - not your total bill. So, your annual costs may be higher or lower than the figure Ofgem has revealed.
The cap is set quarterly and is based on movements in the wholesale markets. As international prices have eased, the next Ofgem limit for July 2024 could be set to fall again.
So, what exactly is expected to happen to energy prices later this year? We've looked at the latest predictions for gas and electricity prices in 2024.
Will energy prices go down in 2024?
According to the latest energy price cap predictions from energy consultancy Cornwall Insight, good news is on the horizon for energy bill payers.
The company has accurately forecast price cap movements throughout the energy crisis. Its most recent prediction came within 2% of the final Ofgem figure for the April price cap.
It has predicted better news is in store for the July and October price caps. It expects the July figure to come in 13% below April's cap at £1,465 for a typical household.
While the October cap is forecast to mark a bigger rise than previously - 4% as opposed to 3% - the energy consultancy now anticipates it will be roughly £20 a year (£1.66 a month) cheaper than its previous forecast at £1,524.
We will find out what the July to September cap is on 28 May. October's figures will be released on 27 August.
Commenting on the figures, Cornwall Insight's principal consultant, Dr Craig Lowrey, said: “Forecasts show energy bills returning to their lowest levels in over two years, providing a much-needed respite for a nation struggling with a cost of living crisis.
“Fairly healthy gas supply across the Atlantic, coupled with high storage levels in Europe, are helping to keep bills down. But we mustn’t get too complacent. Our energy system is still walking a tightrope, and we cannot be sure another political or economic crisis won’t send bills straight back up.
“Even with the drop, prices will remain a struggle for many. We need to remember, bills remain hundreds of pounds above pre-pandemic levels, and if we don't speed up the switch to sustainable energy and cut down on volatile imports, they are likely to stay that way.”
What about standing charges?
Currently, energy customers pay a fixed daily charge covering the costs of being connected to a supply, such as cable and substation maintenance. The amount varies depending on where in Great Britain the customer lives.
There has been anger about charges going up - in many areas, the charge has doubled over the past two years - and the inability to reduce these fixed fees. At present, they mean you pay around £300 a year before you've even used any energy.
As part of its latest price cap announcement, Ofgem said the charges would be rising as a result of “increasing network costs”. The regulator recently conducted a consultation into the future of standing charges and said it is currently reviewing more than 40,000 responses.
The outcome of this review could have a major impact on energy bills. Experts predict scrapping standing charges would see prices rise significantly.
While everyone is seeing an increase in the amount they have to pay to cover the costs of the nation's energy infrastructure, Ofgem has announced that it will be bringing standing charges for prepayment meters in line with the rest of the market.
This move means the so-called 'prepayment premium' will be ended for good, saving households with this type of meter £49 a year. The government's Energy Price Guarantee had temporarily equalised standing charges, but was due to expire in April.
Should I fix my energy?
Some energy providers are offering fixed energy deals that are slightly below the April price cap. However, if Cornwall Insight's forecasts for the rest of 2024 are correct, they could work out as being pricier than future caps.
The reason why fixed tariffs are struggling to match the price cap is that no one can predict where wholesale prices will go next. Until global gas supplies become more predictable, suppliers will continue to set their rates on or around the cap rather than base them on market competition. Cornwall Insight expects it will be the 2030s before we see prices return to pre-energy crisis levels.
So, should you fix? It very much depends on your attitude to risk. Wholesale energy prices could still spike at any time, so fixing could save you money on future caps. But equally, they could drop significantly, if forward forecasts are anything to go by. Should this scenario play out, you could be paying a higher rate for your energy, and facing hefty exit fees to switch to a better deal.
For more on this, and to see the latest fixed energy deals, check out should you switch to a fixed energy tariff?.
How to keep energy bills low
To help you keep energy bills low, we have gathered some top tips in our article looking at 13 ways to reduce your energy costs. If you're interested in the best ways to improve your energy efficiency and reduce costs, we explore: radiators vs electric heaters, heated airers vs tumble dryers, and wood burning stove vs central heating.
Henry Sandercock has spent more than eight years as a journalist covering a wide variety of beats. Having studied for an MA in journalism at the University of Kent, he started his career in the garden of England as a reporter for local TV channel KMTV.
Henry then worked at the BBC for three years as a radio producer - mostly on BBC Radio 2 with Jeremy Vine, but also on major BBC Radio 4 programmes like The World at One, PM and Broadcasting House. Switching to print media, he covered fresh foods for respected magazine The Grocer for two years.
After moving to NationalWorld.com - a national news site run by the publisher of The Scotsman and Yorkshire Post - Henry began reporting on the cost of living crisis, becoming the title’s money editor in early 2023. He covered everything from the energy crisis to scams, and inflation. You will now find him writing for MoneyWeek. Away from work, Henry lives in Edinburgh with his partner and their whippet Whisper.
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