Brits could be in for a pleasant surprise when it comes to gas prices as a new forecast suggests the cost is set to come in below the Government’s Price Guarantee from July 2023.
This would mean around 26 million households will comply with Ofgem’s price cap as opposed to the Government’s legally enforced top price.
As it stands, the Energy Price Guarantee hinders energy suppliers as it caps the amount they can charge per unit of energy used.
It is set at £2,500 but it is not a cap on energy bills.
The amount is set to jump to £3,000 this April but Cornwall Insight believes the typical annual energy bill this summer could be around £2,800.
Winter being warmer than average and high levels of gas storage has led to a dip in wholesale energy prices.
Cornwall Insight believe that energy costs continuing to plunge below the Government’s Guarantee will result in it no longer being a cost to the Government and in turn, the taxpayer.
Energy bills are likely to remain higher than previous years despite the optimistic forecast Danny Lawson
Factors such as the Price Guarantee capping consumer energy bills and compensating energy suppliers the difference between the Price Guarantee and the price cap has resulted in this being the case.
Cornwall Insight say that while the price cap forecast drop is a “positive” development, they feel household bills are set to remain high and the Government may need to offer support.
The £2,800 forecast remains significantly higher than the Price Cap level of the same period in 2021, which saw it at £1,138.
Principal consultant at Cornwall Insight, Craig Lowrey, said: "We must remain cautious as the government has essentially been underwriting a volatile wholesale energy market - one which is likely to remain unstable throughout the year.
“Even if energy prices continue at current levels, which is a big if the costs to the government over the full period of the Energy Price Guarantee are still contributing to government borrowing and will ultimately fall at the feet of consumers in the form of higher taxes."