UK (Parliament Politics Magazine) – UK energy price cap set to fall £22 to £1,733 in January, offering brief relief before spring increase of £75, says Cornwall Insight.
As reported by The Guardian, forecasters warn British households will see a small £22 drop in energy bills this January, but government policies may push costs up by £75 by spring.
What did Cornwall Insight say about the UK energy bills drop and rise?
Cornwall Insight forecasts UK dual-fuel price cap to drop 1% in January, saving households £22 and bringing the annual total to £1,733.
Analysts warn that the small January energy bill relief will be temporary, with the annual cap set to rise £75 to fund Britain’s gas and electricity networks.
The forecast comes just over a week before Chancellor Rachel Reeves unveils her autumn budget, with reports suggesting she may cut the 5% VAT on energy bills to ease household costs.
Cornwall Insight predicts this move could reduce household energy bills by around £80 annually on average.
Craig Lowrey, a principal consultant at Cornwall, said,
“January’s price cap dip might look like good news, but it’s only part of the picture. Bills are still well above pre-crisis levels and are set to climb again in April, and this time, it’s not higher wholesale prices driving the rise.”
He stated,
“The government pledged to lower bills on the promise that investment in renewables would reduce our reliance on global energy markets and stabilise bills, but what we’re seeing now is a shift, wholesale prices are no longer the main story.
Mr Lowrey added,
“The real pressure is coming from rising non-energy costs, with levies and policy decisions associated with that investment in renewables driving up bills.”
He continued,
“While adjustments to subsidies or VAT may make a dent in bills, the government doesn’t have full control over many of the underlying non-wholesale costs. The shift to renewables will bring long-term stability and energy independence, but it’s not free. The upfront costs are real, and they’re landing on bills now.”
Mr Lowrey warned the government must balance short-term bill relief with long-term energy stability, ensuring households understand the trade-off.
He said,
“If the government doesn’t bring the public with them on the energy transition, then it risks undermining the very policies intended to support them.”
What did experts say about UK renewable power and energy bills?
Jess Ralston, an energy analyst at the Energy and Climate Intelligence Unit think tank, stated,
“An upgraded power grid will enable the UK to use more of its own renewable power, making it less reliant on foreign gas imports and less at the mercy of the kinds of foreign price swings that saw household bills soar.”
He added,
“Low levels of investment into infrastructure like schools has been mirrored in our electricity system and that is now catching up with us. But an upgraded power grid will enable the UK to use more of its own renewable power, making it less reliant on foreign gas imports and less at the mercy of the kinds of foreign price swings that saw household bills soar.”
Julia Pyke, joint managing director of the nuclear power project Sizewell C, said,
“Cornwall Insight’s analysis shows exactly why Britain needs more nuclear, not less.”
According to her, the new RAB levy on UK electricity bills to fund nuclear projects totals just over £10 a year.
She added,
“But it unlocks at least 60 years of clean, reliable, homegrown power that can stabilise bills for generations and creates tens of thousands of British jobs and opportunities which completely transforms communities.”
What are energy prices for UK households?
The energy price cap for a typical dual-fuel household paying by Direct Debit is £1,755 annually. This covers both electricity and gas.
Electricity costs are capped at 26.35 pence per kWh with a daily standing charge of 53.68 pence, while gas costs are capped at 6.29 pence per kWh with a 34.03 pence daily standing charge.
These prices include wholesale energy costs, network maintenance, and other regulatory charges. This reflects a 2% increase from the previous quarter but is still higher compared to 2024 levels.