Credit, Collections & Insolvency News
New forecasts from Cornwall Insight predict a typical dual fuel consumer’s energy bill will fall to £1,683 from July, this would represent a drop of almost 9% on April’s £1,849 cap, with an average customer paying £166 less.
a mix of geopolitical and market developments, including the United States’ decision to introduce tariffs, and the broader impact of these, and the impact of above-average temperatures, which has reduced demand expectations and eased pressure on short-term prices.
While falling prices may appear to be good news, they are also a sign of how volatile the market remains. There are many moving parts, and with the July cap still a month away from being finalised, it is too early to say whether these reductions will hold.
Several geopolitical factors could continue to influence prices. For example, US tariffs could discourage Liquified Natural Gas (LNG) exports to other countries, potentially pushing down US LNG prices. However, there’s no guarantee this cheaper gas would make its way to the GB market.
At the same time, discussions in the EU around easing gas storage requirements for the coming winter could reduce injection demand and put further downward pressure on prices. However, the wider geopolitical backdrop, including the conflict in Ukraine, the uncertain nature of the tariffs and broader economic uncertainty, could just as easily push prices back up. Cornwall Insights says that it expects a continued level of volatility in both prices and forecasts as markets respond to these ever-changing geopolitical, macroeconomic and supply-side dynamics.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight said “While a fall in bills will always be welcomed by households, we mustn’t get ahead of ourselves. We have all seen markets go up as fast as they go down, and the very fact the market dropped so quickly shows how vulnerable it to geopolitical and market shifts.
“It would be easy to conclude the fall in the market was due to the United States tariffs, but the reality is that the interactions within and across the energy market are complex – from energy storage requirements in Europe, to warmer weather, to global trade issues – and contribute to the volatility we have seen in recent weeks.
“There is unfortunately no guarantee that any fall in prices will be sustained, and there is always the risk of the market rebounding. The only real way to protect households from this constant cycle of instability and insecurity is to reduce our dependence on international wholesale markets. That means continuing to focus on growing low-carbon energy generation here in Great Britain and building a more secure, more sustainable energy future.”
Elise Melvin, Energy Expert at Uswitch.com said “A summer-time fall in the price cap might sound like relief for under-pressure households – but this forecasted reduction is a drop in the ocean compared with the savings available by getting a fixed deal.
“For most households – if you haven’t switched in a year or more, you are probably on a standard tariff, and effectively throwing money out of the window.
“There are a number of fixed deals on the market cheaper than the predicted July rates. The average household on a standard tariff could save around £258 a year by switching compared with the current price cap, which also beats the latest July prediction.”
Cornwall Insight’s Default Tariff Cap Forecast Based on Typical Domestic Consumption, and Per Unit Costs and Standing Charge Values (dual fuel, direct debit customer)
