On Monday, Cornwall Insight, an energy consultancy, declared that consumers are presented with a chance to “take back control” over their energy bills as the suppliers will offer their services at a competitive price.
Over the last decade, it was normal for consumers to switch between energy suppliers as the Ofgem energy regulator tried to bring about competition between them. 29 suppliers faced bankruptcy due to a sharp surge in energy prices, leaving a few handfuls to offer their services at fixed prices or below the price cap.
As a last option, some of the main providers were paid to serve hundreds of thousands of consumers, while Octopus Energy made a deal with the government to purchase Bulb.
The energy crisis began in 2021 when the invasion of Ukraine forced all energy suppliers to raise customer bills as wholesale gas prices skyrocketed. As the situation normalizes, gas prices are now 18 months low and are expected to fall further later this year.
On Monday, Cornwall Insights predicted that Ofgem energy prices would rise to £3,294 in April, then hover around £2,150 from July to the end of the year.
The principal consultant at the consultancy, Dr. Craig Lowrey, stated: “While prices under the [Ofgem] cap remain considerably higher than historic norms, the combination of falling wholesale prices and an increase in the energy price guarantee could see the return of competitive tariffs, and with it the chance for consumers to take back some control over their energy bills.”
“Of course, all of these outcomes remain subject to wholesale energy market volatility – the potential for which cannot be discounted while the current energy crisis is still ongoing.”
As per an analyst at Investec, Martin Young, suppliers are most likely to offer their services at a fixed price well below the £3,000 government guarantee, which is in effect until next April, “although the level of exit fees will be important in assessing attractiveness.”
The government has been under pressure to set the guarantee at £2,500 instead of increasing it in April. The government could save as much as £2.6 billion if it ignores the calls, as predicted by Cornwall Insight. As wholesale gas prices decline, it is projected to cost £29.4 billion, which is significantly less than the prior predictions of £26.8 billion.
- Published By Team Timeswire