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‘Increased level of uncertainty’ sees 2024 energy price cap forecast revised upwards

‘Increased level of uncertainty’ sees 2024 energy price cap forecast revised upwards
Paloma Kubiak
Written By:
Paloma Kubiak

Households are braced to expect typical energy bills to remain above the current annual level of £1,834 – with the average dual fuel cost coming in closer to £2,000 a year.

From January 2024, average gas and electricity bills are forecast to stand at £1,923.33, according to energy analysts Cornwall Insight.

While this is lower than the previous forecast published in August which projected typical dual fuel costs of £1,979, bills are expected to remain higher throughout 2024 compared to the current level of £1,834.

Cornwall Insight forecasts typical standard variable rate energy bills to stand at:

  • £1,929.09 in Q2 2024
  • £1,879.66 in Q3 2024
  • £1,916.81 in Q4 2024.

This is based on the new typical domestic consumption values (TDCVs) of 2,700 kWh for electricity and 11,500 kWh for gas.

Energy regulator Ofgem sets the energy price cap quarterly, with the next announcement for January to March 2024 due on Thursday 23 November.

It’s important to note that the energy price cap sets a maximum price that energy suppliers can charge for each kilowatt hour (kWh) of energy and a daily limit on the standing charge applied which covers the cost of supplying energy to your home. It isn’t a cap on bills as how much you pay will depend on the amount of energy you use.

The cap will also vary depending upon where in the country you live, with Cornwall Insight figures representing the national average.

Standing charge and unit costs

Cornwall Insight also published predictions on the standing charges and unit costs for a dual fuel customers paying by direct debit over the four quarters in 2024 (click to expand):

Source: Cornwall Insight

Richard Neudegg, director of regulation at Uswitch.com, said: “As temperatures fall and we start to use more energy at home, predictions that energy prices might rise will cause real nervousness in households on the standard variable tariff.

“Cornwall Insight’s revised predictions on where the price cap could go reflect an increased level of uncertainty in the wholesale market.

“This new analysis serves as another reminder that – as the price cap is now refreshed every three months – consumers on standard variable tariffs are particularly exposed to fluctuations in the wholesale energy market.”

He added that the risk of volatility is part of the reason why billpayers value the certainty offered through fixed rate deals.

“The regulator needs to do more to encourage suppliers to offer fixed deals more widely and at more competitive prices.

“The price cap is no longer fit for purpose, and the system needs reforming in a way that protects households but also puts pressure on suppliers to do better on price and innovate to create genuine points of difference,” Neudegg said.