Latest Cornwall Insight’s analysis has suggested that the energy price cap is expected increase by five percent in the first quarter of next year, before declining from the end of March.
Based on it;s analysis, for a typical dual fuel household, it has predicted that the Q1 2024 price cap will be £1,931, this is a rise of 5% from the current price cap which is set at £1,834 per year for a typical consumer.
The research says that the cap will decline from the end of March 2024, although this remains subject to the ongoing volatility in the wholesale energy markets, however, it will continue to remain well above historic levels.
Wholesale market volatility caused by geopolitical concerns including disruptions to the Finnish Balticconnector, the Israel-Hamas conflict and industrial action at gas production facilities in Australia, have all contributed to the higher energy unit prices.
Relatively mild weather has seen a slight dip in gas prices in recent weeks. If this trend persists, it might filter into bills as we move through 2024. However, given the number of variables which will weigh on the market over the next few months, sharp price falls are not expected.
From the second 2024 price cap period (April-June), Cornwall Insight is also predicting a rise in electriricty standing charges, with April seeing an increase of 8p per day. The high increase in electricity standing charges is primarily due to the ongoing reform of network charges, which has shifted more of the charges from per unit to per day, meaning that customers will incur such costs regardless of their actual consumption.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight said “An unstable wholesale energy market, coupled with the UK’s reliance on energy imports, makes it inevitable that energy bills will rise from current levels. This leaves households facing yet another winter with bills hundreds of pounds higher than pre-pandemic levels, and affordable fixed deals few and far between.”
“The King’s Speech acknowledged that it is our exposure to volatile international energy markets that has led to higher and less predictable bills. While we continue to advocate for immediate targeted support for vulnerable consumers, it is evident that the only enduring solution lies in transitioning the UK away from the influence of global energy prices towards sustainable, domestically sourced energy.”
“The government’s commitment to attracting record levels of investment in renewable energy sources is a promising step, and ensuring they deliver on this pledge will be paramount in shaping a more stable and affordable energy future.”