Household energy prices are expected to drop to their lowest in more than two years from July, according to a leading industry expert.

Analysts at Cornwall Insight have predicted the price cap on average household energy bills will fall again this summer to £1,574 per year, a 7% decline from £1,690 currently. The regulator, Ofgem, will confirm the new price cap for the July to September quarter next Friday.

If Cornwall Insight's prediction is correct, gas and electricity bills will have fallen by roughly 25% from £2,074 in July of last year. It will also be the lowest since the cap surged from £1,277 to £1,971 in April 2022 as it headed to a peak of £4,279 in January 2023.

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Looking further ahead, Cornwall Insight expects a slight rise in October before falling again in January 2025.

While the reduction in the price cap is "good news", Cornwall Insight noted that bills still remain hundreds of pounds above pre-crisis levels. This has raised concerns about the effectiveness of the price cap, prompting Ofgem to announce earlier this year that it will be undertaking a comprehensive review of the cap and its structure.

Among the moves under consideration is a removal of the ban on providers offering cheaper rates to new customers, which are known as acquisition-only tariffs. As a result of the ban, which came into effect in April 2022, critics say the price cap has effectively become a price fix.

Ofgem is also considering the future of daily standing charges for being connected to gas and electricity supplies, which are seen as detrimental to those who use less energy.

Craig Lowrey, principal consultant at Cornwall Insight, said a further reduction in the price cap won't "erase all the problems" in the energy market.

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“While the cap is certainly not the ticket back to long-term energy bill affordability, Ofgem’s review could pave the way for fairer, more efficient energy bills," he said. "However, given the breadth of reforms being considered by the regulator, it is worth remembering that such changes will inevitably lead to trade-offs.

"For example, reducing standing charges, while seemingly beneficial for low-energy users, could lead to higher unit prices. This could disproportionately impact those in less energy-efficient homes or with greater energy needs, some of whom could be vulnerable."

Mr Lowrey added: “The path forward for energy pricing remains uncertain, and with stakeholders advocating for reforms – coupled with a general election on the horizon – energy bills are likely to be an area of continued debate and transformation in the months ahead.”