Energy prices to fall to £2,200 by July

The energy market researcher’s forecasts – which are around £300 a year lower than its previous predictions issued earlier this month – suggest prices in the second half of this year will remain below the Energy Price Guarantee (EPG) level, meaning it will not cost the government any money from July.  

The government introduced the EPG in September last year, setting a cap on the maximum a consumer will pay for their energy bills, with this being set at £2,500 per year. From the start of April, this will rise to £3,000 for a typical household.  

Despite an improving energy market outlook, Cornwall Insight has said prices will remain very volatile, with an expectation that wholesale prices will move daily before those cap levels are set.  

The firm’s principal consultant Dr Craig Lowrey said: “As our price cap forecasts fall yet again, it is only natural that people will begin to assume our predictions will stay on a downward trajectory. But we really don’t have a precedent to look at to work out how the market will evolve in 2023.  

“Wholesale gas prices in particular are searching out a floor and a ceiling level in novel circumstances where we in the UK and Europe are going to be more dependent on liquified natural gas than ever before. Right now, positive gas storage and demand reductions in Europe mean the key winter period of concern is looking better.  

“But, whilst today it is ‘steady as she goes’ it is practically inevitable that forecasts will at some point change again as the market wanders about in search of its equilibrium, probably with lower peaks than last year, but not necessarily prices returning to what we define as normal range.”