Energy research firm Cornwall Insight is now predicting that Ofgem’s price cap will rise rather than fall in the new year, as the UK experiences a cold snap.
Cornwall Insight monitors wholesale prices and uses a similar method to what Ofgem uses to calculate the actual price cap. In its last forecast for the first quarter of next year, it predicts the average UK duel-fuel home will be paying £1,736 for its energy, a rise of 1% on current prices. The firm had previously predicted a slight fall.
Cornwall Insight said in a press release:
“The cap level is a reflection of a relatively volatile wholesale market, influenced by supply concerns tied to geopolitical tensions, maintenance on Norwegian gas infrastructure, weather disruptions, amongst other smaller factors. Despite prices stabilising in comparison to the past two years, the market remains very sensitive to global events.”
It added that this would mean prices remaining above their historic averages. Indeed, the slight rise comes on top of a larger increase in the price cap in October. However, the research firm still expects a drop in energy prices in spring and autumn next year.
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