Energy bills set to DROP below £3,000 as soon as April but fresh price warning issued by Ofgem

Energy bills could fall below £3,000 a year within months - but regulator Ofgem has warned “high and volatile” prices are here to stay in the immediate future.

The regulator says the recent drop in gas prices would cause lower bills than feared, although vulnerable households will require continued subsidies.

Jonathan Brearley, Ofgem’s chief executive said that bills could “possibly” decrease below £3,000 as soon as April – three months earlier than analysts forecast.

However, he added that wholesale prices were still three times higher than historic levels and were “unlikely to go back to the levels we saw pre-pandemic”, when bills were about £1,200 a year.

The chief also recommended that the Government should consider a “social tariff” to protect vulnerable households from high prices.

Yesterday, National Grid extended the use of its emergency measures to support Britain’s electricity supplies amid continued cold weather.

Across the UK, consumers took part in a new “demand flexibility service” where households will be paid to use less electricity between 4.30pm and 6pm.

The scheme was used for the first-time last night between 5pm and 6pm as more than £2million is expected to be paid out.

Octopus Energy which saw the most users sign up to the programme – a total of 400,000 customers – was offering rewards worth £3.37 for every kilowatt-hour of electricity they avoided using.

Last night, National Grid also instructed three emergency backup coal-fired power plant units to be warmed.

It ordered them to be warmed up on Sunday for potential use yesterday but cancelled early yesterday after the outlook for supplies improved.

National Grid said it had activated the schemes again “as part of cautious measures to ensure we continue to have adequate operational reserves.

"The use of these additional services is not an indication that electricity supplies are at risk but that we require greater options.”