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Energy prices to fall significantly in Ofgem’s latest cap call

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Energy prices to fall significantly in Ofgem’s latest cap call By Proactive Investors

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Published Feb 22, 2024 12:18

© Reuters. Energy prices to fall significantly in Ofgem’s latest cap call

Proactive Investors – Energy prices are expected to fall by as much as 15% from April thanks to a consistent drop in wholesale costs, with regulator Ofgem due to firm up the news on Friday.

In its latest decision, Cornwall Insight analysts expect the regulator to reduce the energy price cap from £1,928 currently to £1,635 from April 1.

This cap effectively determines bills by limiting what suppliers can charge and represents the amount a typical household would pay over a year on such rates.

Though the new cap is indeed set to fall drastically, at £1,635 it would remain around £400 higher than in early 2019, reflecting still historically high prices.

Electricity is set to cost 23.27p and gas 5.96p per kilowatt hour under the new cap as per Cornwall, compared to 28.62p and 7.42p at the moment.

Daily standing charges, which are paid regardless of consumption, are expected to rise as Ofgem allows suppliers to recoup energy debt from unpaid bills – which hit a record last year.

Daily charges on electricity and gas will rise from 53.35p and 29.60p to 58p and 30p per respective fuel in Cornwall Insight’s view, therefore.

Ofgem is yet to confirm whether suppliers will be allowed to claw back debt in the upcoming price cap window, however, which will run from April to July.

Such moves previously allowed the likes of British Gas to materially benefit by charging more on bills, with the supplier’s profits growing tenfold to £799 million last year as a result.

Read more on Proactive Investors UK

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Energy prices to fall significantly in Ofgem’s latest cap call

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