Less than a week after the January energy price cap rise, bad news is predicted for the Spring.
Analysis from Cornwall Insight predicts April’s energy price cap is now expected to rise to £1,785 a year for a typical dual fuel consumer – nearly a 3% increase on January’s cap of £1,738.
The analysts say December saw a slight dip in wholesale energy prices, driven by easing supply tensions in Europe but geopolitical instability saw prices rebound in the second half of the month – due to the uncertainty over the Ukraine transit deal and the higher level of withdrawals from EU gas storage facilities.
These factors, combined with the significant uncertainty over the US LNG export plans under a second Trump presidency, means there is a high degree of variability in forecasts.
On top of the wholesale market developments, Ofgem are set to make changes that could impact consumer bills predicts Cornwall Insight. It says one area is the likely extension of the Supplier Bad Debt Allowance beyond the end of March.
Initially introduced to cover additional support credit for some prepayment meter customers, this currently stands at approximately £30 a year.
They report: “Additionally, the impact of the Energy-Intensive Industry (EII) network charge exemption scheme remains uncertain. This government-legislated initiative compensates EIIs for part of their network charging costs, which could further influence overall pricing.
“While these factors may drive bills higher, Ofgem is also exploring other cost measurement adjustments that could reduce bills by £10 or more.
“Looking further ahead we are currently expecting July’s price cap to fall from April’s cap, with October expected to see rises again. The April cap is due to be announced near the end of February.”
