The Ofgem price cap on gas and electricity has been forecast to drop from July and continue to drop.

The average household could benefit from a £129 lower annual bill from July, according to energy consultants Cornwall Insight, with the official announcement from Ofgem due on Friday.

However, the drop would only partially compensate for a series of rises over the last three quarters as wholesale gas prices rose and European stores of the fossil fuel were used to combat a cold winter.

All energy costs have risen around two-thirds after the invasion of Ukraine, and bills are unlikely to settle back to a more ‘normalised’ level in the immediate future. Together with infrastructure costs, international volatility, joining the EU CBAM and internal uncertainty over measures such as zonal pricing, the act of predicting UK energy costs remain akin to reading tealeaves.

The UK still suffers from some of the highest energy costs in the world, in part due to its heavy use of gas. For industry this is a severe handicap, whilst domestically the UK’s notoriously poorly insulated houses mean consumers are hit twice.

Commenting on the price cap forecast from Cornwall Insight, Jess Ralston, analyst at the Energy & Climate Intelligence Unit (ECIU), said: "Predicted falls in energy bills simply cancel out recent rises, meaning the crisis is not over for bill payers who are still struggling with gas prices significantly above pre-crisis levels. UK's renewables are boosting our energy security and stabilising prices by reducing the amount of gas we need to import from abroad as the North Sea gas output continues its inevitable decline. Wholesale gas has cost the UK more than £140bn over the past few years."

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