Energy bills in Great Britain could fall this summer but ‘crisis not over’

Ofgem price cap on gas and electricity likely to drop by £129 to £1,720 a year, says consultancy Cornwall Insight

Household energy bills could drop this summer but experts have warned that “the crisis is not over” for households and manufacturers struggling to afford gas and electricity costs. The industry regulator’s quarterly price cap is expected to fall in July by an average of £129, or 7%, according to forecasts from Cornwall Insight, a leading energy consultancy. It has predicted that the cap will fall to £1,720 a year for a typical dual-fuel household this summer, from £1,849 under the current limits. The modest drop would return the energy price cap to its levels at the beginning of the year – but this is still about 60% higher than where the cap was set in the summer before Russia’s invasion of Ukraine caused a global energy market surge.   Britain’s gas and electricity prices have remained some of the highest in the world, in large part due to reliance on gas for generating electricity and in home heating, which has led to record high levels of household energy debt and a sharp slump in industrial activity. The output from Britain’s energy intensive industries has fallen by a third since 2021, according to official government figures published on Monday, and is now at its lowest level since 1990. Figures from the Office for National Statistics (ONS) have revealed that the average electricity price for companies and manufacturers rose by 90% at the peak of the global energy crisis in 2023, and were still 75% higher at end of 2024 compared with costs in 2021. Gas prices have taken an even greater toll on non-domestic energy users. Costs surged by 187% at the peak of the crisis, according to the ONS, but remained 120% higher than pre-crisis levels at the end of last year. “These figures are a wake-up call,” according to Sam Richards, the chief executive of Britain Remade, a pro-growth lobby group. “Sky-high energy costs have gutted Britain’s industrial base, with output in sectors like steel and chemicals collapsing to record lows. If we’re serious about protecting jobs and rebuilding our manufacturing strength, we need to cut industrial electricity costs, and fast.” Figures published last week by the ONS warned that households are struggling with energy costs too. A record proportion of households were unable to pay their energy bills by direct debit last month because there was not enough money in their bank accounts. The watchdog for Great Britain, Ofgem, is expected to set out the next cap, which reflects the average annual dual-fuel bill for about 29 million households, on Friday before it takes effect from July until the end of September. The latest estimate from Cornwall marks a small rise from its previous forecast of £1,683 a year, which the analyst said was partly due to increases in energy wholesale markets. Dr Craig Lowery, a consultant at Cornwall, said energy bills were still too high for many. “Prices are falling, but not by enough for the numerous households struggling under the weight of a cost of living crisis, and bills remain well above the levels seen at the start of the decade,” he added. “The fall is also a clear reminder of just how volatile the energy market remains – if prices can go down, they can bounce back up, especially with the unsettled global economic and political landscape we are experiencing. This is not the moment for complacency.” Jess Ralston, an analyst at the Energy and Climate Intelligence Unit, said: “Predicted falls in energy bills simply cancel out recent rises, meaning the crisis is not over for bill payers who are still struggling with gas prices significantly above pre-crisis levels. “Costs of oil and gas will always be volatile and can be manipulated by foreign actors like Putin, but every home that is insulated and has a heat pump installed reduces our gas demand and so exposure to these geopolitically vulnerable markets.” Cornwall expects that the price cap will fall again in October, followed by another drop in January, although this is subject to several varying factors, including weather patterns, the impact of the war in Ukraine and EU gas storage rules.