Why your energy bills are predicted to drop by more than £300 in April

Energy bills could drop annually by £300. Credit: Getty Images

Energy bills are forecast to fall by more than £300 a year from April due to a drop in wholesale gas prices, according to analysts.

Cornwall Insight has predicted average bills will drop by 16% on the previous quarter, reaching their lowest point since Russia invaded Ukraine.

The forecaster has also estimated Ofgem's price cap, which represents the average annual bill for a UK household will drop from £1,928 to £1,620 from April – £40 lower than it predicted in December.

Furthermore, it has predicted prices will remain lower than the current cap throughout 2024, falling to £1,497 a year in July before rising slightly to £1,541 in October.

Why are prices likely to fall?

The biggest reason behind the predicted fall in energy prices is a drop in wholesale gas prices.

European gas stocks also remain higher than expected levels for the time of year due to the relatively mild winter.

Which? Energy editor Emily Seymour said: “Millions of households across the country will be relieved to hear energy bills are still predicted to fall in April.

“If you’re on a variable tariff, then any reductions to the price cap will be automatically applied in April. If you are on a fixed deal and think you might be paying more than the new rates come the spring, then it’s worth checking the exit fees to see if you can leave early if prices do fall below the cost of your fixed tariff.

“In the long term, a properly targeted social tariff is desperately needed to ensure the most financially vulnerable are able to afford their energy bills.”

Are there any global factors that could affect the price drop?

The US military, preparing an aircraft to launch for operations in the Red Sea, is joining the UK in carrying out joint airstrikes in Yemen. Credit: AP

Cornwall Insight has said tensions in the Red Sea thus far have failed to derail the prospect of lower energy bills.

However it warned that despite the recent wholesale price drop, UK energy prices remained vulnerable to global events, and any potential disruption to supplies would “weigh on market confidence, and we will need to keep a close eye on market fluctuations over the next few months”.

Additionally, ongoing consultations by Ofgem on potential changes to the price cap, including the standing charge and bad debt collection, could affect the overall figure.

Craig Lowrey, principal consultant at Cornwall Insight, said: “Though recent trends hint at possible stabilisation, a full return to pre-crisis energy bills isn’t on the horizon.

"Shifts in where and how Europe sources its gas and power, alongside continued market jitters over geopolitical events, mean we are likely still facing costs hundreds of pounds above historical averages for a while, potentially the new normal for household energy budgets."

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