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Energy bills could fall to £2,053 as Ofgem will lower its cap

According to analysts, household energy bills could fall to an average of £2,053 a year this summer as the regulator prepares to lower its cap on energy prices next week.

However, campaigners have warned that the lower cap on energy bills, to be announced on Thursday, is unlikely to provide much relief to households that struggled to pay their bills over the winter because the government’s support schemes have ended.

According to analysts at Cornwall Insight, households should also expect their energy bills to remain stubbornly high through the coming winter, at almost double the rates paid in 2020, and remain above pre-pandemic levels for the rest of the decade.

The government’s energy price guarantee capped gas and electricity bills at an average of £2,500 for a typical household from October last year. Energy bill payers also received a £400 rebate spread over six months from October, which helped reduce costs further.

From July this year, the standard energy tariffs used by 27 million households will again be decided by a cap calculated by Ofgem, the energy regulator for Great Britain, based on the cost of supplying energy.

Cornwall Insight has predicted that Ofgem’s cap will fall by more than £1,000 from £3,280 for the three months from April – when households were still protected by the government scheme – to £2,053 from July to reflect the tumbling cost of gas in the global wholesale markets.

The price cap is expected to remain at similar levels next winter, too, according to Cornwall’s analysts. They have predicted that the cap will dip slightly to £1,975 for the three months from October before rising again to reach almost £2,045 for the first quarter of next year.

“Despite the cap falling from the sky-high prices of the past two years, the figure remains over £1,000 per year more than the price cap levels seen before the pandemic,” Cornwall Insight said. “We do not expect bills to return to pre-2020 levels before the end of the decade at the earliest.”

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