As discussed in our blog from March we are beginning to see the energy market return to more normal pricing. The price cap for July will fall to £2,074 from £3,280 set in April. Consumers have been paying £2,500 due to the Government’s Energy Price Guarantee. Therefore with the cap at £2,074 consumers will begin to benefit from some relief. However gas and electric prices are still above the levels seen before Russia invaded Ukraine.
The Price Cap is expected to fall to below £2,000 by the third quarter of the year. However this is still substantially above the £1,100 level seen in 2021. There are now some fixed price deals available for consumers, but with lower prices ahead it might pay to wait to fix your supply. Octopus Energy will be introducing a variable tariff from the beginning of July. This deal will track wholesale energy prices by the day. A deal that might suit households who use most of their energy off-peak.
Ofgem CEO Jonathan Brearley said:
“After a difficult winter for consumers it is encouraging to see signs that the market is stabilising and prices are moving in the right direction. People should start seeing cheaper energy bills from the start of July, and that is a welcome step towards lower costs.
“However, we know people are still finding it hard, the cost-of-living crisis continues and these bills will still be troubling many people up and down the country. Where people are struggling, we urge them to contact their supplier who will be able to offer a range of support, such as payment plans or access to hardship funds.
“In the medium term, we’re unlikely to see prices return to the levels we saw before the energy crisis, and therefore we believe that it is imperative that government, Ofgem, consumer groups and the wider industry work together to support vulnerable groups. In particular, we will continue to work with government to look at all options.”
One element of our energy bills that doesn’t get a lot of attention is the standing charge. These charges have gone up somewhat unnoticed over the last few years. in 2021 standing charges were 51p a day and are now expected to rise to 84p per day later this year. That is an increase from £185 to £307 per year. With lower overall bills on the way the standing charge could make up to 15% of your total energy bill. The reason for this is apparently to cover the cost of the 31 energy suppliers that have gone bankrupt in the last two years.
On a final note. Writing blogs for Carter Electrical Installations over the last three years I have learnt so much about the energy markets and Green Energy. My one main observation would be how the high energy prices has driven the boom in households and businesses installing solar panels, inverters, storage batteries, EV chargers and Air Source Heat Pumps. As alternative energy sources boom the long term trend for oil and gas prices could be down, especially if the Ukrainian crisis is resolved. Wishing my successor all the very best. Phil