Could energy prices rise again in 2023?

Energy costs have dropped with the new price cap – but will it last? (Picture: PA)

With the cost of living crisis continuing to impact every aspect of life, many will be relieved that the Ofgem energy price cap – which limits the amount energy companies can charge per unit of energy – has dropped sharply as of this month.

The rise saw energy bills skyrocketing over the autumn and winter, and while they remain high, most households will now see their annual bills reduced by around £430.

The new energy price cap is £2,074 – which means bills remain almost twice the price they were when the cap was introduced in January 2019.

And while bills are predicted to remain stable in the coming months, is there a chance energy prices could rise again before the end of the year?

Here’s what we know.

Could energy prices rise again in 2023?

While prices might have dropped, the situation is still very uncertain.

Fatih Birol, the head of the International Energy Agency, has warned against complacency when it comes to energy prices, saying that prices could increase once again, forcing governments to step in and subsidise bills if the Chinese economy strengthens – or if we have a hard winter.

Mr Birol said many European governments had made ‘strategic mistakes’ by relying on Russia too heavily for energy – adding that ‘we cannot rule out’ another spike in gas prices this winter.

‘In a scenario where the Chinese economy is very strong, buys a lot of energy from the markets, and we have a harsh winter, we may see strong upward pressure under natural gas prices, which in turn will put an extra burden on consumers,’ Mr Birol said.

He went on to advise that governments, including the UK, should ‘continue to push measures to save energy, especially as we enter the winter’.

Governments should also push renewable technology so it sees the light of day ‘as soon as possible’ , cut the time it takes for them to get permits, and look for ‘alternative energy options’, he said.

He added that he wouldn’t rule out blackouts this winter, but cautioned that we don’t yet know how strongly the Chinese economy will rebound.

When could energy prices go down?

While bills may have dropped from the highs of last winter, they are still double what they were in 2021 – and it’s likely to remain this way for a long time to come.

Consultancy Group Cornwall Insights has predicted that household bills will remain high for years to come, stating: ‘Despite the cap falling from the sky-high prices of the past two years, the figure remains over £1,000 per year more than the price cap levels seen prior to the pandemic.

‘We do not currently expect bills to return to pre-2020 levels before the end of the decade at the earliest.’

MORE : What happens if I can’t pay my energy bills amid cost of living crisis?

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Prices have remained stubbornly high.