Price cap to climb to more than £3,000

This is a significant increase from the £3,003 figure released by the energy market researcher a couple of weeks ago. Its predictions for the fourth quarter of 2022 have also seen a steep increase, now sitting at £3,244 a year. 

The increasing volatility in the energy market has been driven by 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. 

And with the price cap for the final quarter of this year currently due to be announced next month, Cornwall Insight has said it’s unlikely to see any significant decrease to these predictions. 

There is, however, the potential that cap levels for the first quarter of 2023 onwards could fall if the wholesale market retreats. 

Broken down, it anticipates electricity prices to hit £1,444.20 in the fourth quarter of 2022 - with gas prices being at £1,800.344 during this period of time. In the first quarter of 2023, electricity is predicted to cost £1,485.89 while gas prices will cost £1,877.81. 

These predictions do not, however, take into account the impact of the Energy Support Scheme announced by the government earlier this year. 

Commenting on the news, Dr Craig Lowrey - a 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.”