The energy market analysis firm Cornwall Insight is now predicting a slight rise in the price cap ahead of Ofgem’s official announcement.
Cornwall had previously expected a modest drop in the price cap for the final quarter of the year as people start reaching for their thermostats. Its latest predictions use market data up to August 18 and incorporate the expected policy costs that are also a component of consumers’ bills. It now expects the average UK dual-fuel household to pay £1,737 for energy, although in reality, bills vary based on consumption.
The research firm says the observation window, on which Ofgem partially bases its price cap, has seen considerable volatility. Despite geopolitical events like the Israeli airstrikes on Iran, however, prices subsequently returned to the previous trend. Cornwall says that it expects £15 of the £17 rise to fund an expansion of the Warm Homes Discount for vulnerable households.
Cornwall Insight’s principal consultant, Dr Craig Lowrey, said this exemplifies that the price cap involves more than just wholesale energy prices. He highlighted the:
“…uncertainty facing millions of households, with current forecasts suggesting a sharp drop in bills is unlikely in the near term. Longer term, Ofgem’s review of how Britain’s energy system costs are distributed could reshape the financial burden on consumers, but while some may see savings, others could face higher charges.”
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