Ease in costs this year will give suppliers more confidence to look for clients.

Switching between energy suppliers is anticipated to return later this year after a two-year suspension due to a lack of competition amid high bills.

To “take back control” over their bills as suppliers compete for customers once more, consumers will have the opportunity to lower costs later this year, according to energy consultancy Cornish Insight.

While the industry regulator Ofgem worked to increase competition during the past ten years, switching suppliers has become increasingly common. 

The steep increase in gas prices in 2021, however, caused the bankruptcy of 29 providers, leaving the remaining businesses to give clients fixed offers at or just below the price cap. As Octopus Energy signed a contract with the government to buy Bulb‘s 1.5 million customers, some of the prominent providers in the UK were compensated for taking on hundreds of thousands of consumers through the supplier of last resort process.

According to Cornwall Insight, a drop in pricing can inspire providers to engage in more aggressive customer competition.

Bills have skyrocketed due to the energy crisis, which started in 2021 and was made worse by the invasion of Ukraine and dramatic increases in wholesale gas prices. Though costs are believed to decrease later this year, gas prices have recently dropped to 18-month lows. According to a Monday forecast from Cornish Insight, the Ofgem energy price cap will rise to £3,294 starting in April and remain roughly £2,150 until the rest of the year.

Shortly, bills are still anticipated to increase as the government energy price guarantee, which aims to keep average annual expenses to £2,500, increases to £3,000 in April. A one-time reimbursement of £400 will not be repeated, leaving households worse off.

Principal consultant at the consultancy, Dr Craig Lowrey, stated: “While prices under the [Ofgem] cap remain markedly above historical norms, the convergence of declining wholesale prices and an expansion of the energy price guarantee could result in the return of competitive tariffs, allowing consumers to regain some control over their energy costs.

Naturally, the volatility of the wholesale energy market is a factor that must be taken into consideration as long as the current energy crisis persists.

Although departure costs will be essential in gauging attractiveness, Investec analyst Martin Young said it was “plausible” that suppliers will start providing fixed-price agreements below the £3,000 government guarantee, which is in place until next April.

Pressure has mounted on the government to maintain the guarantee at £2,500 rather than increase it starting in April. According to a Cornwall Insight assessment, the government would save £2.6 billion by rejecting those calls. It anticipates that the cost will be £26.8 billion, while if it stays at £2,500, the cost would be £29.4 billion, significantly less than earlier projections due to the decline in wholesale gas prices.