Personal Finance

Gas and electricity prices won’t return to 2020 levels, energy boss says

Gas and electricity bills will not return to pre-Covid levels, an energy leader has warned.

The costs of moving from fossil fuels to greener energy will keep prices inflated, despite companies recording sky-high profits throughout the energy crisis, the boss of Equinor said.

Andreas Opedal, who runs the Norweigian firm, told the BBC: "I think we have had a lot of cheaper energy in the past and we probably wasted some of it, so we need to make sure we're making the right investments now and everyone should use as little energy as possible."

Equinor's pre-tax profits soared to $24.3 billion between July and September 2022 compared to $9.7bn in the same period the year before.

He said Europe's energy system is being "re-wired" to reduce the reliance on gas but it will require investments, adding: "I would assume that the energy bills may be slightly higher than in the past but not as volatile and high as we have today."

In February 2020, pre-Covid, the energy price cap was £1,042, rising rapidly to £1,971 in April 2022 after Russia invaded Ukraine.

The energy price cap as of January 1 2023 is £4,279 but is being subsidised by the Government to keep it at £2,500 until April 2023.

The cost of wholesale energy has dropped in recent weeks as a warmer-than-average winter in Europe meant gas reserves could be topped up. Prices have even dropped to where they were before the war in Ukraine.

But analysis by NimbleFins explains why consumers won't feel the savings any time soon. There are three reasons why: the energy price guarantee, the timing of energy purchasing and the fact wholesale costs only make up about three-quarters of an energy bill.

The £2,500 Energy Price Guarantee shields billpayers from Ofgem's price cap of £4,279 so any savings made will first benefit the Government as its subsidies will be lower.

It also takes months for lower prices to make their way through to households as energy providers buy their gas and electricity months in advance.

Our graph below shows predictions for energy prices but it also shows the energy price cap.

Natural gas prices

You'll see how long it took for the energy price cap to catch up to the rising costs of energy when they first started rising, and this will probably be similar as prices fall too.

Finally, it's estimated only 74% of energy bills account for the actual energy a consumer is using. The rest covers things like network expenses and Government costs such as environmental tariffs.


Wholesale energy prices are falling: When will I start paying less for gas and electricity?

Average Cost of Electricity per kWh in the UK 2023

Helen Barnett

Helen is a journalist, editor and copywriter with 15 years' experience writing across print and digital publications. She previously edited the Daily Express website and has won awards as a reporter. Read more here.


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