Energy bills unlikely to fall in the medium term, Ofgem warns

  • Energy bills aren’t expected to decline over the decade
  • Households will pay £1,568 per year from July
  • The cost of energy is a key election campaign issue
  • Ofgem heads backs more support for struggling households
A senior man holding his head trying to cope the raising cost of energy and tax bills

Energy prices have become a key campaign issue in the upcoming general election

UK households are unlikely to see a fall in their energy bills over the next 10 years, according to Mark McAllister, chair of Ofgem.

Speaking to the Financial Times McAllister put this down to the costs of building out the electricity network to help support the shift to renewables, warning that he expects bills to be “relatively flat in the medium term”. 

He also said he backed more targeted support for households struggling with their bills. 

“As we build in more and more renewables, we’re also building in the price, amortised over many years, of the networks as well,” he explained. 

“If we look at the forecasts for wholesale prices and then build on top of that the costs of the network going forward, I think we see something in our view that is relatively flat in the medium term.” 

Earlier in May, Ofgem announced that from 1 July to 30 September, gas prices will be capped at 5.48p per kilowatt hour (kWh) and electricity at 22.36p per kWh. The cap does not apply to households in Northern Ireland, but prices are in decline. 

Households using a typical amount of energy and paying by direct debit for dual gas and electricity would pay £1,568 per year, from 1 July. This is a fall of £122 compared to the annual bill on charges between April and June. 

Users who pay their bills every three months by cash or cheque will pay more, an average of £1,668 per year. 

However, the cost of energy is a key campaign issue ahead of the 4 July election, with both the Conservative and Labour parties claiming they will try to bring bills down. 

Energy prices are down by more than 60% since January 2023, which was the peak of the energy crisis, thanks to surging wholesale costs, fuelling inflation and a cost-of-living crisis as a result of Covid-19. 

The National Grid said it would invest more than £30bn (£1bn) in electricity networks over the next five years, with chief executive John Pettigrew recording a “single-digit pound impact” on network costs on bills would be offset by the wholesale cost benefits of building renewables. 

Written by:
Tamara Birch, senior writer, The Eco Experts
Tamara has written about environmental topics for more than four years. This includes advising small business owners on cost-effective ways, like solar panels and energy-efficient products to help them become more sustainable. 
Reviewed by:
Max joined The Eco Experts as content manager in February 2024. He has written about sustainability issues across numerous industries, including maritime, supply chain, finance, mining and retail. He has also written for  City AM, The Morning Star and the Daily Express.
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