British households are set for a small reprieve on their energy costs this winter, but face a significant increase in the spring, according to latest predictions.
January price cap fall
Analysts at Cornwall Insight forecast that the Ofgem energy price cap will decrease from £1,755 to £1,733 per year for typical households paying by direct debit when it changes in January. This represents a modest reduction of £22 annually.
The energy regulator Ofgem will make the official announcement this Friday. This expected dip is attributed to a slight decline in wholesale energy prices across global markets.
Spring bill shock warning
The temporary relief appears short-lived, as Cornwall Insight projects the price cap could increase by approximately £75 per year come April. This would push the typical annual bill to around £1,808.
Craig Lowrey, principal consultant at Cornwall Insight, cautioned: "January's price cap dip might look like good news but it's only part of the picture. Bills are still well above pre-crisis levels and are set to climb again in April, and this time it's not higher wholesale prices driving the rise."
What's driving the April increase?
The anticipated April rise is "largely due to rising charges associated with the operation and maintenance of the country's energy networks, specifically electricity transmission and gas distribution charges."
Mr Lowrey explained the broader context: "The shift to renewables will bring long-term stability and energy independence, but it's not free. The upfront costs are real, and they're landing on bills now. The challenge will be balancing short-term affordability with long-term resilience, and crucially making sure people understand why that trade-off matters."
Understanding your energy bill
It's important to understand that the price cap doesn't set a maximum limit on your total energy bill. Instead, it caps the amount you pay for:
- Unit rates for gas and electricity
- Daily standing charges (fees for being connected to the grid)
Your actual bill depends on how much energy you consume, meaning higher usage results in higher costs despite the price cap protection.
Claim forgotten energy credit
In related news, Ofgem recently revealed that 1.9 million closed energy accounts still contain credit balances totalling approximately £240 million.
This includes households that have moved home within the last five years where previous suppliers couldn't contact them to return outstanding balances.
Ofgem estimates some individuals could be owed more than £100, while others might receive smaller amounts. Energy suppliers are legally required to issue final bills within six weeks of account closure and process refunds within ten working days.
While over 90% of closed account balances are returned automatically, if you suspect you might be owed money, you should:
- Check old letters and emails for final bills
- Contact your previous energy supplier directly
