Ofgem has revealed that the average dual-fuel energy bill will fall below £2,000 a year for the first time since April 2022 this winter.
It announced that from 1 October to 31 December, the energy price cap will be set at an annual level of £1,923 per year for a dual fuel household that pays by direct debit based on the current typical domestic consumption values (TDCV) rate. Ofgem is also set to lower the TDCV it uses to calculate the cap from October, as noted by Cornwall Insight, meaning the cap will stand at £1,834 per year once this takes effect.
However, this is still substantially above levels seen prior to the pandemic and war in Ukraine and also a sign of things to come.
“Unfortunately, our predictions for 2024 show prices continuing to languish well above pre-pandemic prices – something which is current forecast to remain the case for the remainder of the decade,” Cornwall Insight’s Principal Consultant, Dr Craig Lowrey said.
Lowrey pointed to the recent impact on wholesale energy prices across Europe that potential industrial action at Australian liquified natural gas (LNG) production facilities has had, once more showing the vulnerability the UK’s energy system has to global events. Both this, and Russia’s invasion of Ukraine, are examples of how global events can have an impact on customer bills.
Lowrey continued: “The debate around the merits and continued validity of the cap has been compounded by the current cost-of-living crisis. While there is no one simple solution to high energy costs, there are steps that can be taken. Protection of the vulnerable must be a primary concern, and the introduction of social tariffs such as those already in place for water and telecommunications remains an option.”
In terms of what more can be done, Lowrey explained: “Elevating demand-side strategies, like government funding for home insulation and energy efficiency enhancements, could lead to reduced bills. At the same time, a broader approach of prioritising domestically generated energy to lower the influence of the global energy market on UK prices would reduce the impact of international supply shocks.”
Photo by Krzysztof Hepner on Unsplash
