UK Energy Bills Forecast to Fall Further in 2023

As the wholesale gas prices decrease, energy costs are estimated to fall below 2,500 pounds by July 2023, easing some of the burden placed on Britons attempting to cope with the crisis caused by the rising cost of living.

According to Investec’s analysis, the average annual energy bill will fall to 2,478 pounds this summer, down from its previous estimate of 2,640 pounds earlier this month. By the second half of 2023, the average annual bill will be 2,500 pounds.

In recent weeks, mild weather and a lot of gas stored over the winter have reduced wholesale gas prices, easing some worries about Russian gas shortages in the future. But bills are still a lot higher than they were before the energy crisis started in 2021, when households paid about 1,200 pounds.

According to analyst Martin Young of Investec, the tariff cap estimates for the second half of 2023 now stand at approximately 2,500 pounds after wholesale prices fell.

Under the government’s energy price guarantee (EPG), energy costs for a typical household in the UK are limited to 2,500 pounds. However, a household’s usage-based charges are unrestricted. In April, that limit will be raised to 3,000 pounds for an additional year.

The EPG will be less expensive for the Treasury due to a decrease in wholesale gas prices. Investec predicts that the policy will cost 2.3 billion pounds this year, down from about 3 billion pounds in previous years. The United Kingdom’s government made the announcement this week that, starting in April 2023, it would reduce support for companies’ energy bills in order to reduce the Treasury’s bill.