Energy prices predicted to fall by 16% in April

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Energy prices predicted to fall by 16% in April

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By Kevin Peachey
Cost of living correspondent

Domestic energy prices will fall by 16% in April, according to a prediction by consultancy Cornwall Insight, bringing some relief to billpayers.

It said the annual household bill when using a typical amount of gas and electricity was expected to drop from £1,928 to £1,620.

Households have endured two years of high prices, but analysts suggest there could be a further fall in the summer.

Bills would still be higher than the pre-crisis norm.

The prediction is not guaranteed, as it will be another month before the regulator, Ofgem, sets its price cap for the second quarter of the year.

"Healthy energy stocks and a positive supply outlook are keeping the wholesale market stable. If this continues, we could see energy costs hitting their lowest since the Russian invasion of Ukraine," said Craig Lowrey, principal consultant at Cornwall Insight.

How the price cap works
Under Ofgem's price cap, the annual bill for a household in England, Wales and Scotland using a typical amount of gas and electricity, paying by direct debit, stands at £1,928.

However, if you use more, you will pay more because the price of each unit of energy is capped, not the total bill. Specifically, the price of gas is now 7p per kilowatt hour (kWh), and electricity is 29p per kWh.

If the forecast proves to be correct, the annual bill for typical usage would fall to £1,620 in April, a drop of 16%.

Cornwall Insight is then predicting a further fall to £1,497 a year in July, before rising slightly to £1,541 a year in October.

There remains uncertainty over wholesale oil prices owing to disruption in the Red Sea, and wider tensions in the region, but so far that has not affected prices. Supplies of liquefied natural gas from the US, and low prices in the Asian market, have kept prices down.

"Concerns that events in the Red Sea would lead to a spike in energy bills have so far proved premature, and households can breathe a sigh of relief that prices are still forecast to fall," Mr Lowrey said.

"Though recent trends hint at possible stabilisation, a full return to pre-crisis energy bills isn't on the horizon."

Read more at BBC.
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