Energy prices continue to be one of the biggest concerns for UK households as uncertainty around the wholesale cost of gas persists. But will prices come down this year?
Predictions from experts suggest energy prices will come down this year.
Currently, the Energy Price Guarantee (EPG) means an average typical household bill is around £2,500 a year.
The EPG will end in July, and a lower energy price cap - £2,074 - will kick in.
Experts at Cornwall Insight say energy bills for a typical household could drop to around £1,960 for the final three months of the year.
The lower prices reflect a drop in wholesale gas prices, which have fallen significantly since December as a partly mild winter and efforts to maximise gas storage mitigate future shortages of Russian gas.
The drop also means that for the first time in almost two years, there's a chance households could see the return of competitive fixed-price energy tariffs.
Octopus Energy is the first to unveil a new deal, albeit a relaunch of its energy tracker deal, which will go on sale in July. This will allow customers to track and pay the wholesale price of energy, rather than the standard default price.
So what does it all mean for your energy bills? We take a closer look at what you will pay for energy in 2023.
Will energy prices go down in 2023?
Since 1 January energy bills have risen after a surprise change to tariffs by some suppliers. While the increases are minimal for most customers, it will cost some over £100 a year more.
But now we know the energy price cap from July it's clear that energy prices will edge down in 2023 - but any drops will be offset by the ending of government support in the form of the £400 energy discount and the fact energy prices are still double what they were in 2021.
There's good news for some households: those who pay for energy via prepayment energy meters will see a reduction in costs. From July they will no longer be penalised with higher rates, compared with standard non-prepayment customers. This is estimated to save four million households around £45 a year.
If the energy price cap continues to fall this year as predicted, suppliers will finally be able to offer fixed tariffs that compete with the capped government prices. This may leave you wondering should I fix my energy?
Why are energy prices so high?
There are a few reasons for high energy bills but it is mainly driven by Russia’s squeeze on gas supplies to Europe.
Russia's invasion of Ukraine in February 2022 led to cuts in gas supplies to Europe, which resulted in European natural gas prices soaring as the region scrambled to find alternative sources for their gas needs.
Britain actually only ever depended on Russia for a small percentage of its gas, but it is still connected by pipeline to the wider European market and Europe depends on Russia for around 40% of its gas supplies. It means that British energy suppliers pay a similar price to energy suppliers in Europe.
Price rises have been astronomical. For example, at the start of 2021, UK gas was at 38p per therm. In August 2022 it went up to 537p per therm.
As a result, dozens of UK energy suppliers went bust in 2021.
UK households have the added disadvantage of mostly having homes heated by gas boilers (85% of homes compared to fewer than 50% in France and Germany) and around 40% of our electricity is generated by gas-fired power plants.
Can I get help with energy bills?
Energy bill help includes: energy suppliers' hardship funds, and financial support via your local council's Household Support Fund or welfare assistance schemes. We explain available help with energy costs in more detail.
Ultimately, continue to trim your outgoings as and when you can because energy prices are predicted to stay higher than we are used to for some time.
It may be worth trying tricks, for example, like putting cling film on your windows to keep the heat in your home.
And of course, one of the best ways to save money on energy is to use less – we share our top tips to help cut your usage and keep bills low.
Read more on energy bills
-
-
Octopus Energy relaunches energy tracker deal – we explain what you need to know and if it could save you money
If you’re an Octopus Energy customer, you may be able to save on your energy bills with the relaunch of its tracker deal. We look at how it works
-
Three energy firms pay £8m in switching compensation - has your provider paid out?
More than 100,000 customers have received compensation after changing providers, but is now a good time to switch energy suppliers?
-
Octopus Energy relaunches energy tracker deal – we explain what you need to know and if it could save you money
If you’re an Octopus Energy customer, you may be able to save on your energy bills with the relaunch of its tracker deal. We look at how it works
-
Three energy firms pay £8m in switching compensation - has your provider paid out?
More than 100,000 customers have received compensation after changing providers, but is now a good time to switch energy suppliers?
-
HMRC tax credit renewal packs: act quickly to avoid losing benefit payments
Households receiving tax credits will be asked to confirm their details to ensure they continue to receive their entitlement. Here’s everything you need to know to make sure you don’t miss out on up to £3,480 a year
-
Mobile provider rewards: how to earn up to £700
Your phone could be the key to unlocking hundreds of pounds worth of discounts and freebies that you don’t even know about. We reveal which mobile providers offer the best rewards
-
How much do cooking appliances cost to run?
Energy-saving cooking tips from the Energy Saving Trust
-
Virgin Media leaves thousands without broadband: are customers entitled to compensation?
Tens of thousands of Virgin Media customers were hit by broadband outages yesterday. We explain your rights if your broadband goes down
-
Broadband switching service delayed - how it will eventually work and why it’s crucial to switch
A broadband switching service designed to make it easier to change to a cheaper or faster deal has been delayed. We explain how you can still avoid huge increases to your monthly internet bill
-
Heat pumps: why you can claim a £5,000 government grant for longer
Why you now have more time to apply for a government grant towards getting a heat pump in your home
