Cornwall Insight has released its final forecast for the July-September 2024 energy price cap, predicting a 7% decrease from the current cap.
The new cap for a typical dual fuel household is expected to be £1,574 per annum, down from £1,690.
This would mark a 25% reduction over the past year, with prices around £500 lower than in July 2023.
Despite the decrease, energy prices remain significantly higher than pre-crisis levels, prompting concerns about long term affordability for consumers.
Cornwall Insight’s projections indicate a slight rise in the cap in October, followed by another reduction in January 2025.
Mike Thornton, Chief Executive of Energy Saving Trust, welcomed the lower prices but emphasised the need for ongoing government action to reduce energy costs permanently and support the transition to net zero.
Mr Thornton said: “A key issue is that the relative cost of electricity has increased to around four times as high as the cost of gas. The continuing distortion of electricity prices is undermining the roll out of heat pumps, slowing down the move away from expensive and polluting fossil fuels in our homes.
“While the UK Government has committed to reviewing the way gas and electricity is priced more broadly, disappointingly it’s unlikely we’ll see tangible changes soon.
“A decision needs to be made in the short term to lower heat pump running costs and give people and industry a clear signal that low carbon heating will be part of a net zero future.
“There is no time for delay. No one should take this lower price cap as a sign of stability, with forecasts showing that energy prices are set to rise again this autumn and will be staying high overall for the next decade.
“We still urgently need policies that support people to use less energy and install cost effective energy efficiency improvements in their homes, to bring down energy bills and carbon emissions for the long term.”
Dr Craig Lowrey, Principal Consultant at Cornwall Insight, noted that while the cap reduction offers some relief, energy bills remain hundreds of pounds above pre-crisis levels.
Dr Lowrey stressed the importance of Ofgem’s comprehensive review of the cap and its structure, which could lead to significant changes within the next two years.
Dr Craig Lowrey said: “While the cap is certainly not the ticket back to long-term energy bill affordability, Ofgem’s review could pave the way for fairer, more efficient energy bills.
“However, given the breadth of reforms being considered by the regulator, it is worth remembering that such changes will inevitably lead to trade-offs.
“For example, reducing standing charges, while seemingly beneficial for low-energy users, could lead to higher unit prices.
“This could disproportionately impact those in less energy-efficient homes or with greater energy needs, some of whom could be vulnerable. Finding the right balance is crucial.”
Richard Neudegg, Director of Regulation at Uswitch, commented: “The future still remains uncertain, and with the price cap changing every three months – currently expected to rise in October before falling slightly in January – it’s crucial not to be complacent.
“Households who want to lock in rates for price certainty should run a comparison to see what energy tariffs are available to them.”
