Households have been told that energy bills will be £600 less than feared this summer due to falling wholesale gas prices.
In the Autumn Budget, the Government forecasted that the average household energy bill would rise to £3,000 when the Energy Price Guarantee is increased. However, Think Tank, The Resolution Foundation has revised this figure saying that the average household will pay £2,400 in 2023-24.
This fall has been backed up by reports from energy consultancy Cornwall Insights, which predicts that the average energy bill will be £2,360 over the summer. According to The Times (opens in new tab) Cornwall said it expected gas prices to fall by 26 per cent between spring and summer, and electricity prices to fall by 32 per cent.
(Image credit: Future PLC)
However, while energy bills are going to be lower than anticipated, The Resolution Foundation clarified that they will still be £400 higher than they have been this year. Many households will still feel the pressure of an increase in energy bills in April as the government Energy Price Guarantee is raised from £2,500 to £3,000.
‘Falling wholesale gas prices have been the big economic good news story of the year so far. This will bring real benefits to families, even if it might not feel like it for some time to come,’ says Emily Fry, Economist at the Resolution Foundation (opens in new tab).
‘While energy bills are still set to rise next year by another £400, we’re not on course to see the sustained £3,000 annual bills many feared.’
(Image credit: Smart Energy GB)
‘The cost of living crisis is far from over, but falling gas prices mean that it’s looking less bleak than just a few months ago,’ she adds. So now isn’t the time to forget all the advice on how to save on energy bills.
The reason behind the new average energy price prediction is the drop in wholesale gas prices. In 2023-24 these are now down by 70 per cent from the peak in August, due to a mild winter and European countries cutting their dependencies on Russia.
However, the energy markets over the past year have been very volatile so the outlook in the long term is still uncertain. While the pressure is still going to be tough on household finances, it should hopefully be less than we originally feared.