Energy bill forecasts have been cut for the second time this month, giving a boost to households and the UK Government.
The price cap is forecast to fall to £2,478 per year in July, according to Investec, which is more than £150 below an estimate made on January 4.
The Telegraph says the cut comes as gas prices continue to tumble thanks to warmer-than-usual winter weather.
Investec now expects the price cap on energy bills to fall to £3,317 in April, then £2,478 in July and £2,546 in October. That compares to previous forecasts for these months of £3,458, £2,640 and £2,704 respectively.
This would give a big financial boost to the government as it would reduce the amount of state support needed.
However, bills are still set to be far higher than historic norms. In October 2021, the price cap was just £1,277.
Strains
Prices have surged due to strains on gas supplies amid Russia's war on Ukraine.
The price cap on household energy bills determines how much suppliers are allowed to charge consumers.
The cap is currently reset every three months. In October 2022, it surged to £3,549 following months of high prices, up from £1,977 previously.
Instead of allowing households to bear the full increase, the government stepped in to keep household bills at an average £2,500 a year - paying suppliers the difference between that level and the price cap.
The £2,500 guarantee was originally set to last for two years, but Jeremy Hunt, the chancellor, decided to raise it to £3,000 from April to ease the pressure on state finances.
Martin Young, an analyst at Investec, now estimates the guarantee will cost £2.3bn during 2023-24, down from £3bn previously.
Exact price level
The exact price level of the price caps across 2023 will depend on gas prices in coming months, however.
Competition for gas is likely to rise again as countries start to refill storage stocks for next winter, meaning prices could yet rise again.
- The owner of British Gas yesterday predicted an eightfold rise in annual profits as a result of high energy prices.
It expects to report an adjusted earnings per share of 30p for 2022 when it publishes results next month, up from 4.1p per share in 2021.
That is even higher than what analysts had been predicting, with Investec forecasting a figure of 25.4p per share and profits of £2.4billion.
In a trading update, Centrica also said it expects to have finished the year with more than £1billion in cash.
The huge boost to the firm's profits is likely to prove controversial, with the government having already made a cash grab on the profits of oil and gas producers.
However, RBC Capital Markets predicted that Centrica will end up paying a "staggering" £4.3billion in windfall taxes to the Exchequer up to 2028.