Energy bills forecast to hit £3,363 a year

New forecasts from Cornwall Insight are predicting that typical gas and electricity bills in England, Wales and Scotland could reach £3,363 in the new year.

The figures have increased significantly from the £3,003 figure forecasted two weeks ago. Predictions for the Q4 2022 (Oct-Dec) Cap, have also seen a steep increase, and now sit at £3,244 a year.

Ongoing uncertainty regarding Russian gas flows into continental Europe, as well as more recent concerns such as the halted strike by Norwegian gas workers, have led to an increasingly volatile energy market, driving the rise in wholesale energy prices – which ultimately trickles down to consumers.

While there is the potential that cap levels for Q1 2023 onwards could fall if the wholesale market retreats, with the Q4 2022 price cap currently due to be announced next month, we are unlikely to see any significant decrease to these predictions.

These predictions do not include the impact of the Energy Bills Support Scheme announced by the government earlier this year.

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.”

Cornwall Insight’s Default Tariff Cap forecasts

QUARTERLY	Q4 2022 CI Forecast	Q1 2023 CI Forecast
Electricity	£1,444.20	£1,485.89
Gas	£1,800.34	£1,877.81
TOTAL	£3,244.54	£3,363.70
AVERAGE		£3,304.12