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Energy bills forecast to dip in October before rising in January

Paloma Kubiak
Written By:
Paloma Kubiak

Average energy bills are projected to dip in October to £1,860 before rising to £1,960 in January 2024, a leading energy insight group suggests.

As of July, the energy price cap set by regulator Ofgem stands at £2,074, down from the £3,280 set for April – though billpayers were cushioned by the Government’s energy price guarantee of £2,500.

While we have to wait till August for Ofgem’s official quarterly price cap announcement for October, analysts at Cornwall Insight have shared their latest thoughts on where average bills will stand.

It said there will be “small fluctuations” throughout the year compared to the same period last year and it is expected to remain “significantly above pre-pandemic levels for the foreseeable future”.

For October, it predicts the energy price cap for a typical dual fuel, direct debit billpayer will fall to £1,860, a slight fall from the £1,871 it forecast back in June.

From January 2024, it is expected to rise to £1,960, up on the £1,900 it forecast last month for the new year.

For March 2024, it pencils in average bills to come in at £1,917 while from July they would fall back to £1,870.

Now, it’s important to note that the energy price cap sets a maximum price that energy suppliers can charge for each kilowatt hour (kWh) of energy bills but it isn’t a cap on bills as how much you pay will depend on the amount of energy you use.

This means:

  • Electricity – £0.30 per kWh and a daily standing charge of £0.53.
  • Gas – £0.08 per kWh and a daily standing charge of £0.29.

Cornwall Insight forecasts the following over the next few quarters:

Electricity Q4 23 Forecast Q1 24 Forecast Q2 24 Forecast  Q3 24 Forecast
Standing Charge (£/day) 0.50 0.50 0.57 0.57
Per Unit Costs (p/kWh) 28.27 29.46 27.83 26.70
Gas Q4 23 Forecast Q1 24 Forecast Q2 24 Forecast  Q3 24 Forecast
Standing Charge (£/day) 0.29 0.29 0.29 0.29
Per Unit Costs (p/kWh) 7.06 7.63 7.39 7.25

‘Mixed outlook: Relief and disappointment’

Craig Lowrey, principal consultant at Cornwall Insight, said: “The news of a relative stabilising of energy bills will no doubt leave households with mixed feelings. After the surge in bills seen last winter, it may bring a sense of relief to people that energy prices are currently not forecast to surge unexpectedly. However, there will also be disappointment with prices still well above the levels seen a few years ago – leaving many longing for more affordable options.

“The wholesale market remains the main driver of bills, and unfortunately there is no immediate prospect of prices there returning to historic averages. Therefore, it becomes imperative the Government and other stakeholders explore alternative measures to cater to consumers. This includes options to provide targeted support to the most vulnerable while promoting flexible energy solutions that encourage efficient energy usage.”

Lowrey added that the UK must remain committed to funding the transition to renewable energy sources and maintaining our net-zero targets.

”By doing so, we can establish a stable and secure energy supply that is less susceptible to fluctuations in the international market,” he said.