Energy bills are anticipated to see a slight decrease in January, but experts are cautioning that they may rebound in the spring. Analysts from Cornwall Insight are forecasting a drop in the Ofgem energy price cap from £1,755 per year for the average household paying by direct debit to £1,733, marking a £22 reduction. Ofgem is set to unveil the January price cap this Friday, with the expected decline attributed to a minor decrease in wholesale energy prices. However, Cornwall Insight anticipates a potential £75 increase in the price cap come April.
Craig Lowrey, a principal consultant at Cornwall Insight, pointed out that while the January price cap dip may seem positive, it is only a partial view. He highlighted that bills remain significantly above pre-crisis levels and are slated to climb again in April, with the upcoming rise not solely driven by higher wholesale prices.
The forthcoming April increase is primarily linked to escalating charges related to maintaining the nation’s energy networks, specifically electricity transmission and gas distribution costs. Lowrey emphasized that transitioning to renewables will bring about long-term stability and energy self-reliance, though it comes with tangible upfront expenses reflected in current bills. Balancing short-term affordability with long-term resilience will be crucial, along with ensuring people grasp the importance of this trade-off.
The price cap does not restrict the total energy cost but rather sets a limit on unit rates for gas and electricity, as well as standing charges. Standing charges represent fees for grid connection. Recently, Ofgem urged nearly two million households to check if they are eligible to claim back £240 million in unclaimed energy credit, as 1.9 million closed energy accounts still hold funds. Ofgem estimates that some individuals could reclaim over £100, while others might be due only 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, but for those potentially owed money, checking for final bills in letters and emails and reaching out to former suppliers is advised.