Energy bills are likely to remain high for the rest of the decade despite a fall in the energy price cap being announced this week, experts have warned.
Energy regulator Ofgem revealed the new cap on a unit of gas and electricity would reduce the average bill to £1,923 from 1 October, from £2,074 per year.
The average customer with a prepayment meter will see their bills fall to £1,949 per year.
But Consultancy firm Cornwall Insight believes the typical bill will rise again in January by around £150 a year.
Watch: Energy bills to rise for many despite reduction in price cap, experts warn
Cornwall Insight does not expect energy prices to return to pre-COVID levels before the end of the decade at the earliest.
And it warned that prices remain subject to wholesale market volatility, with the UK’s reliance on energy imports meaning that geopolitical incidents could continue to have a significant impact.
Dr Craig Lowrey, principal consultant at Cornwall Insight said: “While this modest drop in the cap won’t make a substantial difference to household energy bills, it is encouraging that prices from October are moving in the right direction.
“Unfortunately, our predictions for 2024 show prices continuing to languish well above pre-pandemic prices – something which is currently forecast to remain the case for the remainder of the decade.”
Ofgem said it was cutting the price of gas from 6.9p per kilowatt hour (kWh) to 6.89p from 1 October following a slight drop in wholesale prices.
The price of electricity will fall from 30.1p per kWh to 27.35p.
But despite the fall in the cap, consumers still face the prospect of paying for more this winter because government support which was in place last year has gone.
Then, the cap was effectively superseded by the government’s Energy Price Guarantee (EPG) which kept the average household’s bill at £2,500.
In addition, the government was also paying around £66 per month towards each household’s energy bill.
Ofgem chief executive Jonathan Brearley is one of many to question the effectiveness of the price cap and point towards the benefits of a so-called social tariff, which would offer cheaper gas and electricity to those most in need.
Without that, experts expect that average energy bills will remain at around £2,000 for vulnerable households for years to come.
Citizens Advice has also warned that the average household can actually expect to pay slightly more in the coming winter than they did between January and March 2023 if current forecasts hold.
Its research suggests disabled people, single parents and low-income households earning less than £29,000 will be the hardest hit this winter.
Citizens Advice is calling on the government to do more to help people on the lowest incomes, such as providing additional support through the Warm Home Discount.
The price cap applies to England, Wales and Scotland.