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Energy: Tens of millions of Britons poised for huge win as households could get £500 bill boost | Science | News

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Energy bills for households might be £500 lower than expected in the approaching months because of plummeting gas prices, which could bring relief to thousands and thousands of households across the country. Analysts at Investec forecast that the energy price cap – the utmost annual tariff for gas and electricity – could drop to as little as £2,600 per yr from July. It marks a £500 drop from the wealth manager’s previous forecast of £3,100 per yr. 

At present, the Government’s Energy Price Guarantee is keeping bills for households with typical energy use capped at £2,500. But Chancellor Jeremy Hunt warned within the Autumn Statement that it will go as much as £3,000 from April.

Charities and campaigners have warned that this might push thousands and thousands more homes into fuel poverty amid an already crippling energy crisis that’s forcing Britons across the country to choose from heating and eating this winter.

The rising bills were sparked largely by Russia’s war in Ukraine and President Vladimir Putin’s supply cuts to Europe, which sent wholesale gas and electricity prices spiralling uncontrolled.

But for the primary time for the reason that invasion, UK gas prices have plunged to pre-war levels. Throughout the first days of 2023, natural gas futures fell below 170p per therm – the everyday unit of warmth energy – down from over 500p within the immediate aftermath of Putin’s invasion and a high of above 650p in August.

Meanwhile in Europe, natural gas closed at a 15-month low on Wednesday at €64.30 (£56.55) per megawatt hour. It got here after mild weather, a rise in liquified natural gas (LNG) imports and high gas storage levels appeared to please the markets.

Energy bills might be £500 cheaper than expected from July (Image: Getty )

Hunt

Hunt announced that the value cap will hit £3,000 in April (Image: Sky )

Martin Young, an energy analyst at Investec, said the plunging price of natural gas explains the lower predictions for bills. But he warned that  families will still be forking out much more to pay their energy bills than in previous years. Prior to the Ukraine war, typical households paid not more than under an older price cap £1,277.

Mr Young told the Telegraph: “These are still going to be tough times, because you’ve got still got a reasonably serious cost of living crisis.”

One other forecaster, Cornwall Insight, has also predicted that bills will drop to £2,800 per yr in July, below its earlier forecast of around £3,160. Nonetheless, while gas prices have dropped, experts have explained that it won’t ease bills immediately.

Professor Paul de Leeuw, an authority from the Energy Transition Institute on the Robert Gordon University, told Express.co.uk: “Typically utility firms buy gas and electricity for his or her customers months upfront and can lock in the value to cut back the chance.

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Putin

Putin’s war in Ukraine and gas cuts to Europe sent prices soaring (Image: Getty )

“As such our monthly bills reflect the market price when the utility company acquired the energy moderately than today’s prices. The present energy price cap is predicated on average prices over a six-month period, so for bills to go down, we do must see the wholesale prices coming down within the short, medium and long term (i.e. within the spot market and in the longer term market).”

Dr Anna Valero, a Senior Policy Fellow on the LSE’s Centre for Economic Performance, warned that bills within the UK are prone to stay high for the approaching yr, despite the drop in gas prices.

She told Express.co.uk: “My understanding is that the costs dropped on account of lower demand (on account of mild weather and demand management in EU countries) – but this is just not expected to end in less expensive energy bills for the foreseeable future as gas prices are expected to stay high over the approaching yr – the UK still relies on gas imports.

“Suppliers buy energy upfront, and Ofgem (the Government’s energy regulator) determines the price of shopping for energy from the market by tracking wholesale prices ahead of the subsequent price cap. The value cap is ready to rise to £4,279 in Jan 2023, though the energy price guarantee (EPG) protects households (typical household bill not expected to exceed £2500 until April 2023). The following quarterly price cap update shall be on 27 February 2023.”

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LNG

A spike in demand for lNG could send prices shooting back up (Image: Getty )

UK gas

UK has stopped importing LNG from Russia (Image: Express)

Meanwhile, Tony Jordan, of energy consultancy Auxilione, has warned that prices may even shoot back up after dropping. It’s because demand for liquefied natural gas (LNG) from China could grow and boost prices, while cold snaps also threaten to send demand soaring.

He also warned that restocking European gas storage tanks without alternative supplies because the EU scrambles to wean itself off Russian gas could also prove to be a problem.

He told the Telegraph: “We have never needed to live without Russian gas, we have never needed to have such a giant reliance on LNG.”

This comes after the UK officially “ended all imports of Russian Liquefied Natural Gas”. The Foreign Office announced in a Tweet: “Today the UK has ended all imports of Russian Liquefied Natural Gas. We’re cutting Putin off from funding his illegal war and supporting countries world wide to cut back their very own dependency.”

The US has now develop into the mian supplier of LNG to the UK in addition to to other European nations that when relied on Russian gas. While Britain only got 4 percent of its gas from Russia before the Ukraine invasion, the EU got a staggering 40 percent and was much more dependent.

But since the gas markets are integrated, the availability chain issues and cuts from Moscow had an enormous knock-on impact on the UK too. In line with In line with the UK’s energy regulator Ofgem, wholesale gas prices make up the biggest share of household energy bills, accounting for between 40 to 45 percent of the full.

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