What is happening to energy prices?

With candidates out on the campaign trail today, both major parties are putting energy prices in the spotlight. 

The Conservatives have pledged to make energy price comparison sites easier to use and are considering asking the regulator Ofgem to publish a league table of suppliers, ranking them on their responsiveness to complaints. 

Labour, meanwhile, has pledged to set up ‘Great British Energy’—a publicly owned company focused on clean energy. 

At a campaign event in Belfast Rishi Sunak said today’s energy price cap announcement showed the economy had “turned a corner”. 

From July the energy price cap—the maximum price that can be charged per unit of gas and electricity—will be set at a level which means a typical household using both electricity and gas and paying by direct debit will pay an average of £1,568 a year. That’s a fall of £122 compared to the current price cap set in April. (The consumer website MoneySavingExpert has a full breakdown of the figures.)

Energy bills are currently at their lowest level since the Russian invasion of Ukraine in February 2022.

However analysts at Cornwall Insight have forecast that the drop may only be temporary, suggesting that prices will increase again from October—equating to a price cap of £1,762 a year for a typical household—and will remain around this level from January 2025. 

It’s worth noting that the Typical Domestic Consumption Value—on which Ofgem’s figures for a “typical household” are based—has dropped since August 2023, when Ofgem reduced its estimates partly due to increased household efficiency, but also because people were cutting their energy use in response to high prices.