Cornwall Insight has eased its predictions for the price cap over the coming months – although rates will remain historically high.
The energy specialist has cut its outlook for the next two quarters to £4,586 per year in January 2023, and £5,015 per year in April 2023.
It previously predicted a peak of £6,616 per year next Spring – meaning it has cut its forecasts 25 per cent.
This follows rationing and energy saving announcements from European policymakers and the successful topping up of gas storage to over 80 per cent.
It also believes the UK’s energy system is “currently well supplied,” following concerns of potential blackouts and supply shortages.
Nevertheless, it warns wholesale costs will remain historically high meaning the difference between the frozen limit for energy bills and gas prices is still expected to expand in the coming months.
The forecaster said: “It is important to note that these are still extraordinarily high and would represent a significant increase in household energy bills. It doesn’t diminish the importance of action being taken by government today And furthermore the outlook for winter energy costs remains highly uncertain, with many risks still present.”
British households will see their annual energy bills capped at £2,500 for two years in a £130bn-plus scheme that will save consumers thousands of pounds.
In the House of Commons today, Prime Minister Liz Truss revealed the two-year Energy Price Guarantee will begin at the start of October and that the government will pay energy suppliers the difference between the cap and what they would have charged without any intervention.
The £2,500 figure is above Ofgem’s current £1,971 energy price cap, but far below what the cap would have risen to next month and in January.
Meanwhile, businesses and public sector organisations have been promised “equivalent support” for six months, however exact details of the plan have yet to be announced.
She also announced a raft of measures intended to increase domestic energy supply, including lifting the moratorium on fracking, new licensing for oil and gas exploration and a review of the UK’s 2050 Net Zero target to ensure it is “pro business and pro growth”.
The plans will mostly be paid for through increased borrowing, driving the UK’s debt pile to even higher levels, with numbers outlined by Chancellor Kwasi Kwarteng later this month.