Predictions and Insights into the Default Tariff Cap

Cornwall Insight is a trusted provider of forecast models for the Default Tariff Cap, commonly known as the price cap. Here, we present our latest predictions for the upcoming cap periods and address frequently asked questions regarding the cap. Our webpage serves as a reliable source of information for anyone interested in staying up to date with the price cap. 

Current predictions: calculated from market closing prices on 24 May 2023

Figure 1: Cornwall Insight’s Default tariff cap forecasts including VAT (dual fuel, direct debit customer, national average figures) 

QUARTERLY Q4 2023 (Oct-Dec) ForecastQ1 2024 (Jan-Mar) Forecast
Electricity £1,033.67£1,055.99
Gas £925.91£970.13
TOTAL £1,959.58£2,026.12

Figure 2: Default Tariff Price cap forecasts, Per Unit Cost and Standing Charge including VAT (dual fuel, direct debit customer, national average figures) 

ElectricityQ423 ForecastQ124 Forecast
Standing Charge (£/day)0.540.54
Per Unit Costs (p/kWh)28.8829.65
GasQ423 ForecastQ124 Forecast
Standing Charge (£/day)0.300.30
Per Unit Costs (p/kWh)6.797.16

Frequently asked questions: 

1. What is the price cap?  

The price cap is a limit on what suppliers can charge domestic consumers per kilowatt hour of energy used, known as the unit rate, and a limit on the standing charge (p/day) which covers the cost of supplying energy to your home.  

The price cap for Q223 (April – June) is set at £3,280 for a typical consumer.  

2. What is a typical consumer?  

To give people an idea of what an average household may be paying under the price cap Ofgem has devised Typical Domestic Consumption Values (TDCVs) for gas and electricity.  

Under the Ofgem definition, a customer with a Typical Domestic Consumption Value (TDCV) uses 2,900kWh per annum for electricity and 12,000kWh per annum for gas.  

While the average consumer cap is helpful for comparison and based on the stated TDCVs, the cap is not a finite limit on the total cost of energy a customer pays per year on their energy bills, this is based on a household’s energy consumption. 

The cap will also vary depending upon where in the country you live, with our figures representing the national average.  

3. How often does the cap change? 

The cap changes on a quarterly basis – Q1 (January to March inclusive), Q2 (April to June inclusive), Q3 (July to September inclusive) and Q4 (October to December inclusive). It is electricity and gas are calculated individually, although tariff rates are typically quoted by suppliers for a dual-fuel customer. 

4. How is the cap calculated? 

The underlying methodology from Ofgem works on a bottom-up basis in which the component elements of the cap are calculated, with these being the wholesale cost of energy and the non-wholesale costs. 

The latter includes network charges, low carbon levies and other policy costs, taxes and assumed levels of margin per customer. 

5. How do Cornwall Insight calculate the price cap forecast?  

We apply the Ofgem methodology with the current wholesale market prices for gas and electricity along with our own view of the non-wholesale elements of the bill. 

These are then applied to the identified TDCVs for gas and electricity to calculate the bill for a typical domestic customer.  

We calculate the figures for individual regions, with our figures representing the national average. 

6. The Energy Price Guarantee is now being used to limit domestic consumer bills, why does the price cap still matter?  

The government introduced the Energy Price Guarantee (EPG) in October 2022, as a response to the increase in price cap levels. The EPG is a limit set by the government on what domestic consumers pay for energy and is currently at £2,500 per annum for a typical consumer.  

As with the cap, the EPG is based upon unit rate and standing charge calculations. When the EPG is lower than the price cap, the government reimburses suppliers up to the price cap limit. Conversely, if the price cap falls below the EPG, households will be charged the price cap, and the government will no longer need to cover the EPG costs. 

The EPG is currently scheduled to remain in place until the end of June. More information on the EPG can be found on the government website here: Energy Price Guarantee.  

Find out about Cornwall Insight’s Default Tariff Cap service and how it could help keep you ahead of the curve with the latest developments, policy changes and price cap analysis: Domestic retail price cap predictor

Cornwall Insight is an independent energy research, analytics, and consulting firm. We do not have any influence over Ofgem or its setting of the price cap.  

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