Energy bills are projected to decrease slightly in January, but there are warnings that they may go up again in the spring. According to analysts at Cornwall Insight, the Ofgem energy price cap is anticipated to drop from £1,755 annually for the average household paying through direct debit to £1,733, resulting in a £22 reduction. Ofgem is set to announce the January price cap this Friday, with the expected decrease attributed to a minor decline in wholesale energy prices. However, Cornwall Insight predicts a potential £75 yearly increase in the price cap come April.
Craig Lowrey, principal consultant at Cornwall Insight, emphasized that while the January price cap reduction may seem positive, it is only a partial view. He pointed out that current bills remain substantially higher than pre-crisis levels and are likely to climb again in April due to factors beyond higher wholesale prices driving the increase.
The expected rise in April is largely linked to escalating charges related to the operation and maintenance of the nation’s energy networks, specifically electricity transmission and gas distribution charges. Mr. Lowrey highlighted that transitioning to renewables will offer long-term stability and energy independence but comes with real upfront costs that are reflected in current bills. Balancing short-term affordability with long-term resilience will be a challenge, underscoring the importance of ensuring people understand the trade-off involved.
The price cap does not determine the total energy costs but rather sets a limit on unit rates for gas and electricity along with standing charges. Standing charges represent fees for grid connection. Ofgem recently urged nearly two million households to check if they are eligible to claim back £240 million in unclaimed energy credit from closed accounts, particularly for those who have moved homes within the last five years and have unclaimed funds with their former energy suppliers.
Ofgem estimates that some individuals could be entitled to over £100 in refunds, while others may only receive a small amount. Energy suppliers are obligated to issue final bills within six weeks of an account closure and refund any owed amounts within ten working days. The majority of closed account balances are automatically returned, but individuals who suspect they are owed money should review final bills and communication from their previous suppliers.
For more than 90% of closed account balances, refunds are processed automatically. If there is a belief that money is owed, individuals should monitor correspondence for final bills and get in touch with their former energy provider for resolution.
