Households face the prospect of an even more expensive winter as energy bills could rise to more than £3,300 a year in January, according to freshly updated forecasts for the price cap.
The energy price cap, which sets the maximum amount that customers on a ‘default’ tariff can be charged, is currently set at £1,971 per year.
But analysts at Cornwall Insight now expect it to rise to £3,244 a year in October and to £3,363 in January, with both predictions revised up by hundreds of pounds in a matter of weeks.
Last month, Cornwall had calculated the cap would rise to £3,003 for the first three months of 2023, but said continued political and economic uncertainty will likely keep pushing wholesale prices higher.
Going up: The energy price cap could rise to £3,244 a year in October and to £3,363 in January
Ongoing uncertainty regarding Russian gas flows into continental Europe, as well as more recent concerns such as the halted strike by Norwegian gas workers, have been driving wholesale energy prices – ‘which ultimately trickles down to consumers,’ the analysts said.
It follows Ofgem’s introduction of quarterly energy price cap changes, which the regulator claims will help households benefit more quickly when prices begin to fall from their current highs.
Dr Craig Lowrey, principal consultant at Cornwall Insight said: ‘As the energy market continues to grapple with global political and economic uncertainty, the corresponding high wholesale prices, and the UK’s continued reliance on energy imports has once again seen predictions for the domestic consumer default tariff cap rise to what are even more unaffordable levels.
‘There is always some hope that the market will stabilise and retreat in time for the setting of the January cap.
‘However, with the announcement of the October cap only a month away, the high wholesale prices are already being ‘baked in’ to the figure, with little hope of relief from the predicted high energy bills.
‘Ofgem are continually reviewing the cap and there are a raft of consultations and potential reforms which could impact these forecasts. However, as it stands, energy consumers are facing the prospect of a very expensive winter.’
