Energy bills are projected to decrease slightly in January, although a potential increase is on the horizon for spring, as warned by experts. Analysts from Cornwall Insight anticipate a drop in the Ofgem energy price cap from £1,755 annually for the average household paying through direct debit to £1,733, marking a £22 reduction.
The announcement of the January price cap adjustment is expected from Ofgem this Friday. The anticipated decrease is attributed to a minor decline in wholesale energy prices. However, Cornwall Insight foresees a potential rise of approximately £75 per year in April.
Craig Lowrey, the principal consultant at Cornwall Insight, emphasized that while the January price cap decline may seem positive, it is only part of the overall scenario. He highlighted that bills remain significantly higher than pre-crisis levels and are likely to climb again in April, with reasons beyond increased wholesale prices driving the surge.
The projected April upsurge is primarily linked to escalating costs associated with operating and maintaining the country’s energy networks, specifically electricity transmission and gas distribution charges. Lowrey emphasized that transitioning to renewables offers long-term stability and energy independence but comes with tangible upfront costs that are currently reflected in bills. Balancing short-term affordability with long-term resilience is essential, underscoring the importance of understanding the trade-offs at play.
The price cap does not restrict the total energy expenses but sets a limit on the unit rates for gas and electricity, including standing charges. Standing charges cover the connection to the grid. Ofgem recently urged nearly two million households to check for potential refunds totaling £240 million in unclaimed energy credits.
Ofgem disclosed that 1.9 million closed energy accounts still hold residual funds, involving households that relocated within the past five years without their previous energy supplier making contact. Ofgem estimates that some individuals could reclaim over £100, while others may be owed smaller amounts. Energy providers are mandated to issue final bills within six weeks of an account closure and provide refunds within ten working days.
Over 90% of closed account balances are automatically returned. Individuals who suspect they are entitled to refunds should monitor correspondence for final bills and reach out to their former supplier.
