Energy prices are anticipated to decline by 16% in April, providing some relief to consumers, according to a forecast by consultancy firm Cornwall Insight. The expected reduction is based on a

typical household's annual bill for gas and electricity dropping from £1,928 to £1,620. Despite two years of elevated prices, analysts suggest the possibility of further decreases in the summer. However, the projections do not guarantee a definite outcome, as the regulator Ofgem will not set its second-quarter price cap until next month.

"Healthy energy stocks and a positive supply outlook are keeping the wholesale market stable. If this continues, we could see energy costs hitting their lowest since the Russian invasion of Ukraine," stated Craig Lowrey, principal consultant at Cornwall Insight.

Under Ofgem's price cap, the annual bill for a typical household in England, Wales, and Scotland using a standard amount of gas and electricity, and paying by direct debit, currently stands at £1,928. The forecast suggests a potential 16% decrease, bringing the annual bill down to £1,620 in April. Cornwall Insight further predicts a decline to £1,497 a year in July, followed by a slight increase to £1,541 a year in October.

Uncertainty remains over wholesale oil prices due to disruptions in the Red Sea and broader tensions in the region. However, these factors have not yet impacted prices, with supplies of liquefied natural gas from the US and low prices in the Asian market helping to keep energy costs down.

"Concerns that events in the Red Sea would lead to a spike in energy bills have so far proved premature, and households can breathe a sigh of relief that prices are still forecast to fall," commented Mr. Lowrey. Nevertheless, a full return to pre-crisis energy bills is not expected in the near future, as recent trends indicate possible stabilization without a complete reversal.

Energy prices have played a pivotal role in the UK's high inflation rate, contributing to increased interest rates and borrowing costs. Some households, especially those in vulnerable situations, have faced challenges in covering bills despite government financial support, resulting in nearly £3 billion owed by customers to suppliers. The regulator is proposing a £16 addition to a typical household bill between April and March 2025 to provide funds for suppliers to offer prepayment plans and write off debts.

It's worth noting that energy prices and the overall sector are regulated differently in Northern Ireland, where households typically pay less than the UK average, while businesses face higher costs. Photo by Lupus in Saxonia, Wikimedia commons.