The average household annual energy bill will plunge by more than £800 from July as gas prices continue to fall, a year after Russia first invaded Ukraine.

The price cap is forecast to fall to £2,165 from July, down from the £3,000 faced from April under the Government’s energy price guarantee, according to Investec.

It comes as European natural gas prices have fallen to their lowest levels in 18 months after a mild winter meant storage levels have remained high across the continent.

Wholesale costs for gas surged to record levels in August as Europe tried to reduce its reliance on Russian fuel after its invasion of Ukraine.

Household energy bills should stabilise later in the year, with the price cap rising modestly to £2,190 from October.

Investec's final estimate for the price cap in April is £3,332.

It means the Government will pay £332 per household to cover its annual average energy bill from that point as it caps the price paid at £3,000, up from its present cap of £2,500.

Cornwall Insight, an energy consultancy, also published new predictions on Monday which suggested a further drop in bills later this year.

The firm said it expected the price cap to fall to £2,153 in July and £2,161 in October.

In April, it estimates the price cap will be £3,295. 

Dr Craig Lowrey, principal consultant at Cornwall, said: “While tumbling cap projections are a positive, unfortunately, already stretched households will be seeing little benefit before July.

“In the latter half of the year, we see a notable shift in our predictions, as the cap falls below the government support price for the first time since the introduction of the Energy Price Guarantee in October. 

“This gives us optimism as far as the wider energy debate is concerned. While prices under the cap remain considerably higher than historic norms, the combination of falling wholesale prices and an increase in the EPG could see the return of competitive tariffs, and with it the chance for consumers to take back some control over their energy bills.

“Of course, all of these outcomes remain subject to wholesale energy market volatility – the potential for which cannot be discounted while the current energy crisis is still ongoing. 

“As demonstrated by events over the past year, international incidents can significantly impact energy prices, and our dependence on foreign energy imports leaves us more susceptible to global changes.”