The UK’s energy prices look to have weathered disruption in the Red Sea as bills will fall significantly from the start of April, the latest forecast has claimed.
Cornwall Insight, an energy consultancy, said it expects Ofgem to cap the price of a unit of gas at 5.96p and electricity at 23.27p from April 1.
That would save the typical household around £293 per year, with average bills falling from £1,928 per year at present to £1,635 from the start of April.
It is the consultancy’s last forecast before Ofgem announces the price cap next Friday. The forecasts are normally very close to the actual announcements as both are based on publicly available data.
“Lower overall price cap predictions suggest the UK has, for now, weathered the storm of Red Sea tensions, securing a steady supply of LNG (liquid natural gas) through the Atlantic,” Cornwall said.
However, it warned that as long as the UK is reliant on fossil fuels it will have to continue importing expensive gas from countries which could decide to stop selling it to Britain.
The forecast from Cornwall is considerably lower than the current price cap, which runs from the start of January to the end of March.
But it is marginally higher than the £1,620 that the consultancy forecasted a month ago.
“Forecasts show energy bills returning to their lowest levels in over two years, providing a much-needed respite for a nation struggling with a cost of living crisis,” said Dr Craig Lowrey, principal consultant at Cornwall Insight.
“Fairly healthy gas supply across the Atlantic, coupled with high storage levels in Europe, are helping to keep bills down.
“But we mustn’t get too complacent. Our energy system is still walking a tightrope, and we cannot be sure another political or economic crisis won’t send bills straight back up.
“Even with the drop, prices will remain a struggle for many. We need to remember, bills remain hundreds of pounds above pre-pandemic levels, and if we don’t speed up the switch to sustainable energy and cut down on volatile imports, they are likely to stay that way.”