Price cap forecast to rise by five percent

Based on analysis from Cornwall Insight, the cap will go up from its current level of £1,834 per annum to £1,931 at the start of January, with the wholesale market volatility caused by geopolitical concerns contributing to higher energy unit prices.  

However, the relatively mild weather has seen a slight dip in gas prices in recent weeks. If this persists, the energy market researcher says it could filter into bills throughout 2024 – although, given the number of variables which will weigh on the market over next few months, sharp price falls are not expected.  

The forecaster is also predicting a rise in electricity standing charges from the second 2024 price cap period, with April seeing an increase of 8p per day. This is primarily due to the ongoing reform of network charges – which has shifted more of the charges from per unit to per day, meaning customers will incur such costs regardless of their actual consumption.  

Cornwall Insight principal consultant Dr Craig Lowrey 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.”