Britain's energy price cap will have halved compared to a year earlier by January 2023, according to analysts.
Ofgem’s price cap will sit at £2,004 compared to £4,279 at the start of 2002, consultancy Cornwall Insight forecast on Thursday.
The cap, which determines how much suppliers can charge for energy, will fall to £1,978 this October meanwhile – its lowest point since April 2022.
Ofgem governs how much suppliers, such as Centrica PLC (LSE:CNA), can charge per unit of gas and electricity, with the cap laying out how much an average household would pay over the course of a year at the current rate.
Energy bills are currently capped at £3,280, but will fall significantly to £2,074 in July, reflecting lower wholesale gas prices, which soared in the wake of the Ukraine war.
Cornwall Insights consultant Craig Lowrey warned that despite the lower cap, change was needed across the energy market, with gas prices having fallen to pre-Ukraine war levels as early as January, as per Trading Economics data.
“Households are still facing the challenge of bills that are well above historic levels,” he commented, “this situation brings us back to the question of the cap’s purpose.
“[There are] doubts about the cap’s effectiveness in protecting consumers and its impact on tariff competition [have] become a regular part of energy discussions.
“Any reductions in the price cap should not diminish the sense of urgency in implementing necessary changes.”
Last January’s marked the highest price cap since Ofgem first implemented the measure in early 2019.
Bills have been subsidised under the government’s Energy Price Guarantee though, meaning households have not been burdened with the full amounts for suppliers since last October.