With inflation, food prices, and the Ofgem price cap all falling in recent weeks, there’s reason to believe there is light at the end of the cost-of-living crisis tunnel.

Energy bills have been a particular pain point for households after skyrocketing in the aftermath of the pandemic and subsequent invasion of Ukraine.

So, the recent move by Ofgem to reduce the price cap below £2,000 has been met with cautious optimism. At first glance, it appears households will be paying less for their energy this winter. However, a closer look at the figures reveals customers could be paying up to £100 more this year, and hundreds more than before the pandemic – especially those in smaller homes that consume less.

We look at why prices are still so high and what you might expect to pay in the coming months.

Ofgem introduced the energy price cap to control the cost of variable tariff energy deals by setting the maximum price suppliers can charge households per unit of energy. It started creeping up during the pandemic but soared after the Ukraine invasion, reaching £2,500 in October 2022. In January 2023, it was lowered to £2,500 through the Government’s price guarantee.

The introduction of the energy support scheme, which automatically deducted £400 from energy bills between October 2022 and March 2023, helped to keep bills lower.

An analysis of numbers provided by comparison website Uswitch shows that a low-usage household paid £203.65 for their gas and electricity between October and December 2021, if they were on a variable tariff. In 2022, they were set to pay £418.31 for three months, but with the discount, they would have paid £219.31, which amounts to just £15.66 more.

This year, low-usage households are set to pay £300.02 between October and December, an increase of £80.71, or £26.90 more per month, since last year and over £100 more since before the pandemic.

A medium-usage household is set to pay £465.07 over the next three months, up from £447.05 last year with the discount applied. This is a slight increase compared to last year but significantly more than they paid before the pandemic.

High-usage households are the only cohort set to have a reduction in their bills, from £734.02 to £673.22. However, they will still be paying £100.13 more than they did in 2021 and £248.42 more than what they were paying before the pandemic.

When will energy bills start to fall?

Having a smart meter is the best way to know exactly how much energy you are using on a monthly basis. But here are some rough estimates:

• A low-usage household is generally a flat or 1-bedroom house OR a household of 1 or 2 people.
• Medium usage tends to be a household of 2 to 3 people OR a 3-bedroom house.
• The highest usage is commonly a 5-bedroom house OR a household of 4-5 people.

The energy support scheme helped shield households from the steepest rises in energy bills by offering a £199 discount between October and December and a further £201 between January and March. However, price volatility could mean the pain is unlikely to subside anytime soon. Recent strikes in Australia have caused gas prices to creep up.

While lower wholesale prices have led some suppliers to start offering fixed tariffs again, it’s unlikely you’ll be able to get a bargain.

Predictions suggest that the price cap will rise again in January, the time of year when households use the most energy. Forecasting energy prices years in advance means they are subject to change, but for now, experts think households will be paying more for their energy for a little while longer.