Households were given an unfamiliar dose of positivity on Wednesday as Europe’s potential decoupling of wholesale gas and electricity prices sent costs tumbling and led to forecasts for energy bills being cut.
This resulted in one energy consultancy firm, slashing its energy price cap forecast for January.
Auxilione lowered its forecast by £620 to £5,012 and its prediction for April by over £1,400 to £6,269.
Forecast cuts came flooding in after UK wholesale prices slumped by approximately 20% on Tuesday in its largest correction since the latter months of last year, Auxilione commented.
European lenders are considering splitting wholesale gas and electricity prices – which are linked – to alleviate the cost-of-living crisis for homes and businesses.
Auxilione cautioned, however, that people should not get carried away with the modest positivity this week.
Tony Jordan, senior partner at the firm, said: “This is far from over. Without interventions, there’s far worse to come yet.”
UK energy regulator Ofgem last week hiked the price threshold for 24mln homes by 80% to £3,549, with it coming into effect from October.
Wednesday’s estimate from Auxilione is still 41% above the cap announced on Friday despite being reduced by £620.
Ofgem has been reviewing the energy price threshold quarterly, with the next increase in place from the beginning of October to 31 December, when it will likely be altered upwards again in January and April next year.
Jonathan Brearley, the regulator’s chief executive, has insisted the new PM and Cabinet “provide an additional and urgent response to continued surging energy prices,” but no action will be taken until at least 5 September, when either Liz Truss or Rishi Sunak steps into 10 Downing Street.