Energy bills are projected to decrease slightly in January, with a potential subsequent increase in spring, according to experts. Analysts from Cornwall Insight anticipate the Ofgem energy price cap to drop from £1,755 annually for an average household paying by direct debit to £1,733, resulting in a £22 reduction.
The January price cap announcement by Ofgem, expected this Friday, is attributed to a minor decline in wholesale energy prices. Nonetheless, Cornwall Insight foresees a potential £75 yearly rise in the price cap come April. Craig Lowrey, principal consultant at Cornwall Insight, cautioned that while the January decrease may seem positive, bills remain significantly higher than pre-crisis levels and are likely to climb in April due to increased charges related to the maintenance of the nation’s energy networks.
The forthcoming April increase is primarily linked to escalating costs associated with operating and maintaining the country’s energy networks, particularly electricity transmission and gas distribution charges. Lowrey emphasized that transitioning to renewables will offer long-term stability and energy independence, but it comes with upfront costs that are currently impacting bills. Balancing short-term affordability with long-term resilience is crucial, he noted.
The price cap does not restrict the total energy cost but rather sets a limit on the unit rates of gas and electricity, along with standing charges. Standing charges cover grid connection fees. Ofgem recently urged nearly two million households to check if they are eligible to claim back £240 million in unclaimed energy credit from closed accounts, emphasizing the importance of contacting old suppliers for refunds.
Ofgem estimates that some individuals could reclaim over £100, while others may only be owed a small amount. Energy suppliers are mandated to issue final bills within six weeks of an account closure and provide refunds within ten working days. Although more than 90% of closed account balances are automatically returned, individuals who suspect they are owed money should review correspondence for final bills and reach out to their previous energy provider.