Average energy bills to hit £3,363 in the New Year
The energy price cap – a limit on the unit rate and standing charge for default tariffs – has been revised upwards from the predictions set just two weeks ago.
New forecasts from Cornwall Insight have seen the energy price cap for Q1 2023 rise to £3,363 a year for average gas and electricity billpayers on standard variable tariffs.
This is up “significantly” from the £3,003 figure released just two weeks ago.
And predictions for the Q4 2022 period have also seen a steep increase, and now sits at £3,244 a year, up from £2,980.
Cornwall Insight said the ongoing uncertainty of Russian gas flows into continental Europe, as well as concerns surrounding Norwegian gas worker strikes, have led to increased volatility as wholesale energy prices rise, which will “ultimately trickle down to consumers”.
The energy consultancy said that while there is the potential for the energy price cap for Q1 2023 to fall if the wholesale market retreats, a significant decrease is unlikely.
It comes as the energy regulator – Ofgem – is set to announce the price cap next month for bills from October.
‘Prospect of a very expensive winter’
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.”