Household energy bills on track to fall by a quarter this year – but are still up by more than a quarter on pre-crisis levels 23 February 2024 Resolution Foundation analysis of Ofgem’s Price Cap for April-June 2024, announced this morning (Friday), and Cornwall Insight forecasts for the price cap in the second half of the year, show that household energy bills are on track to fall by 24 per cent (or £545) in real terms in 2024, compared to last year. The latest Ofgem price cap will deliver the second biggest percentage fall in consumer energy prices since its introduction in 2019. However, with just 16 per cent of annual gas consumption taking place between April and June (compared to 45 per cent between January and March), energy prices already faced this winter matter most for households’ annual energy bills. Fortunately, the price cap is forecast to fall further in the second half of 2024 – Cornwall Insight forecasts suggest it will fall to £1,463 in Q3 and £1,521 in Q4. Should these forecasts bear out, households can still look forward to lower bills for the year as a whole. Richer households will see the biggest annual cash savings (£620) as they consume more energy, while poorer households will see the biggest proportional fall in energy bills (4.8 per cent of household income) as they spend a greater share of their overall consumption on energy bills. But while bills are falling year-on-year, they remain significantly higher than pre-crisis levels. The Foundation calculates that typical annual household energy bills in 2024 will be 28 per cent (£360) higher in real terms than pre-crisis levels in 2021. Finally, Britain’s large stock of poorly insulated homes will continue to pay over the odds for their energy bills. A typical family in an EPC E-rated property is set to face bills of £1,975 in 2024, compared to £1,540 were they to live in an EPC C-rated property instead. Emily Fry, Senior Economist at the Resolution Foundation, said: “The energy price cap is set for the second biggest percentage fall in April since its introduction in 2019. And with the cap set to remain around £1,500 for the rest of the year, households can look forward to their annual energy bills falling by around a quarter this year, which will ease the pressure on family budgets. “But while energy bills are falling year-on-year, they remain significantly higher than they were before the cost of living crisis. This is especially true for families living in poorly insulated homes, who are having to pay over a third more for gas and electricity compared to living in a well-insulated property.” Notes to Editors Resolution Foundation calculations assume constant levels of energy consumption over the years analysed, using typical consumption levels introduced by Ofgem in October 2023. All figures are demand weighted, reflecting the share of annual household gas and electricity consumption at different prices. Prices are in 2024 terms.
