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Household energy bills could fall in July, according to a forecast from energy consultancy Cornwall Insight. The group said it expects regulator Ofgem to reveal that the typical household energy bill will fall by 9%, lowering bills for millions of people by £166, to £1,683. The forecasting company said the fall in gas prices has been partly caused by US President Donald Trump’s trade tariffs caused a slump in global gas prices.
The tariffs have sparked fears of weaker economic growth across the globe, which means less demand for oil and gas. But Craig Lowrey, principal consultant at Cornwall Insight, said a period of warmer weather had also caused less immediate demand for energy, contributing to the fall in the market. He also cautioned that the unpredictable policy changes coming from the US mean that the situation may yet change before July.
“While a fall in bills will always be welcomed by households, we mustn’t get ahead of ourselves,” he said. “We have all seen markets go up as fast as they go down, and the very fact the market dropped so quickly shows how vulnerable it is to geopolitical and market shifts.” Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets, with the regulator due to confirm the level for July to September on May 27.
The energy price cap was introduced by the Government in January 2019 and sets a maximum price that energy suppliers can charge consumers in England, Scotland and Wales for each kilowatt hour (kWh) of energy they use. It does not limit total bills, because householders still pay for the amount of energy they consume. The cap is significantly lower than at the peak of the energy crisis, which was fuelled by Russia’s invasion of Ukraine in February 2022.
But bills remain much higher than historic levels. In April 2021, for example, the cap was just £1,138, nearly one-third lower than the most recent forecast. It comes as the Government pushes ahead with its policy of building out renewable energy, with a goal of reaching 95% clean power across the electricity grid by 2030.
Recommended reading: Martin Lewis: Biggest factor to change mortgage rates Martin Lewis Energy Price Cap warning DWP State Pension age will have to rise to 71 says report Mr Lowrey continued: “There is unfortunately no guarantee that any fall in prices will be sustained, and there is always the risk of the market rebounding. “The only real way to protect households from this constant cycle of instability and insecurity is to reduce our dependence on international wholesale markets. “That means continuing to focus on growing low carbon energy generation here in Great Britain and building a more secure, more sustainable energy future.
” What is the energy price cap? The term is quite confusing and it's important to note it's not the maximum price you will pay - it's an average. If you use more, you will pay more. The cap was introduced on January 1 2019 by regulator Ofgem, with the aim of preventing the millions of households on expensive variable tariffs from being ripped off.
But it only limits what you pay for each unit of gas and electricity that you use . It's based roughly on wholesale energy prices (those that firms pay) and applies only to providers' standard and default tariffs, which the vast majority of households are now on..
