Energy bills set to stay ‘devastatingly’ high above £3,350 until ‘at least 2024’
Dominic Little on the impact of rising energy bills on families
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Cornwall Insight has said there is little relief in sight for households, as it forecasts the price cap is likely to remain above £3,000 a year on average for the next 15 months. It stated that the average bill over the period between April to September 2023 will sit at £3,649. This is around £300 per month.
Cornwall Insight has also updated its predictions for the forthcoming Ofgem energy price caps.
The energy price cap dictates bills for more than 23 million households and provides an estimate of the bill price based on average use.
For October, the group predict that the price cap will rise to £3,359 for typical use.
In January, it has been predicted that it will rise to £3,616 for typical use.
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October’s forecast marks a 70 percent increase on the current level of £1,971 a year.
It also represents an 163 percent rise in energy bills compared with last winter.
The reason for the increase in the price cap is due to the uncertainty over Russian gas supplies ahead of winter.
Cornwall Insight says that its latest forecasts “indicate the longevity of high household energy costs”.
It will begin to fall after that, but only slowly, reaching £3,569 from July before hitting £3,470 for the last three months of 2023.
The latest price cap predictions are hundreds of pounds above previous forecasts from Cornwall Insight, but are slightly lower than another consultancy, BFY, has predicted.
Last month, Cornwall Insight predicted that annual energy bills would rise to £3,244 from October and £3,363 from January.
However, the BFY Group forecasted that the energy price cap could hit £3,850 between January and April next year.
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Dr Craig Lowrey, principal consultant at Cornwall Insight said: “Customers will be sadly used to these ever-increasing price cap forecasts.
“While the rise in forecasts for October and January is a pressing concern, it is not only the level, but the duration, of the rises that makes these new forecasts so devastating.
“Furthermore, given the current level of the wholesale price, this level of household energy bills currently shows little sign of abating into 2024.”
The reason for the duration is due to the current trends in the wholesale gas market which has been happening since August of last year and the concerns over the Russian supply of gas.
This has been significantly disrupted since the country declared war on Ukraine in February of this year.
Cornwall Insight also stated the Government support for energy which was announced earlier this year will only “scratch the surface” of the problem.
They stated delivering further support needs to be the top priority for the Government and the next Prime Minister.
Dr Lowrey said: “Our new figures show that even increasing support for October will not make much of a dent in what is likely to be a sustained period of high energy bills.
“A review of delivering support for the next cap periods should be on the top of the to-do-list for any incoming Prime Minister.”
“As our price cap breakdowns show, tinkering with VAT and policy costs will only make a dent in bills, when it is the high wholesale prices behind the increases.”
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