Energy price cap to rise more than expected

Cornwall Insight, a specialist in the energy market, has revised up its prediction for Ofcom’s January energy price cap, due to the global wholesale cost of natural gas becoming increasingly volatile.

Analysts at the firm had previously forecast an increase of £64 to £1,897 per year, but now it sees it rising to £1,923 per year, followed by another slight increase in April. Note that price cap is based on what Ofcom regards as typical usage for a dual-fuel customer, so actual energy bills can actually exceed this.

Cornwall cites industrial action at some overseas natural gas facilities, as well as the war between Israel and Hamas, as contributing to its increased prediction. Nevertheless, the wholesale cost of natural gas is still far lower than the unprecedented peak of around 369 pence per therm that was seen following Russia’s invasion of Ukraine. At the time of writing, UK natural gas was trading at around 115 pence per therm.

Cornwall Insight’s principal consultant, Dr Craig Lowrey, said:

“The jump in price cap predictions since September has once again highlighted the vulnerability of UK energy prices—and customer bills—to geopolitical events.”

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