Respected business consultancy Cornwall Insight is forecasting another sharp rise in energy costs in October.
It predicts the October price cap to be £1,714 per annum. This is a rise of 9% from the current price cap which was set at £1,568 per year for a typical consumer. Ofgem will announce the October cap on this coming Friday, August 23.
“We currently forecast the cap will show a further modest increase in January 2025. However, recent tensions in the Russia-Ukraine war could see prices rise further at the start of the new year.”
Over the past few months gas and electricity wholesale prices have rebounded, from their 30-month lows in February. The rise in wholesale market prices, particularly since the start of August, has been the key driver behind the forecast uptick in bills.
While prices have stabilised somewhat compared to the previous two years, the market has not fully recovered from the energy crisis and the impact of Russia’s invasion of Ukraine. As a result, Cornwall Insight believes the market remains highly sensitive to any global events that could disrupt supply. And it says the UK’s reliance on imported energy leaves the country very vulnerable to this global volatility, and is why household and business energy bills forecast to staying far above pre-crisis levels.
The consultancy says it believes it essential that the vulnerable are protected from rising energy bills in the short-term, possibly by the introduction of social tariffs, revising benefits, or adjusting the price cap mechanism. Ofgem is currently undergoing a comprehensive review of the price cap with potential changes to elements such as the standing charge expected over the coming year
