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Energy price rises may be even higher than previously predicted

Energy price rises may be even higher than previously predicted

 

New forecasts from an energy industry consultancy suggests that the average domestic consumer’s energy bills could soar to £3,363 a year from the start of 2023.This is significantly more than the £3,003 figure released by the government.The typical bill now is around £2,000 a year – this follows a rise of £700in April.

Some 23m households in England, Wales and Scotland have their bills governed by the energy price cap – including the vast majority of privately rented properties. The cap limits the amount suppliers can charge per unit of energy, and the standing charge, and from this winter, it is expected that a new cap will be announced every three months.The consultancy making the prediction – Cornwall Insight – says the 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” the consultancy warns.

Dr Craig Lowrey, principal consultant at Cornwall Insight, says: “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.

“[Industry regulator] 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.”

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