Cornwall Insight release final Default Tariff Cap and EPG cost predictions prior to Ofgem announcement tomorrow

Cornwall Insight are releasing our final forecast for the January 2023 Default Tariff Cap (price cap), due to be announced tomorrow (24 November).  We are also releasing our latest forecasts for the three 2023 caps happening between April – December 2023.

At the Autumn Statement, the government announced it would be keeping the Energy Price Guarantee (EPG) beyond March 2023, fixing bills at £3,000 per year for an average consumer up until March 2024 compared to the £2,500 for Winter 2021-22. While consumers will not be directly impacted by the rise in Ofgem’s price cap, if our predictions are correct the relatively high cap will come at a significant cost to the government who will need to make up the difference between the EPG and the cap with suppliers.

Based on our current predictions, Cornwall Insight have forecast the full governmental cost of 18 months of the EPG to be approximately £42bn, up from £38bn just one week ago. Our predictions from Q2 (April – June) 2023 have risen due to an increase in the wholesale market – as have those for the remaining future periods of next year – but are subject to change due to market volatility.

Figure 1: Cornwall Insight’s Default tariff cap forecasts

QUARTERLYQ1 2023  (Jan-Mar) ForecastQ2 2023 (Apr – Jun)  ForecastQ3 2023 (Jul-Sept) ForecastQ4 2023 (Oct – Dec) Forecast
Electricity£2,093.71£1,912.40£1,507.45£1,553.54
Gas£2,151.38£2,008.64£1,850.78£1,817.36
TOTAL£4,245.09£3,921.04£3,358.23£3,370.90

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

ElectricityQ123 (Jan-Mar) ForecastQ223 (Apr- Jun) ForecastQ323 (Jul – Sept) ForecastQ423 (Oct – Dec) Forecast
Standing Charge (£/day)0.460.370.370.37
Per Unit Costs (p/kWh)66.3661.3147.3548.94
GasQ123 (Jan-Mar) ForecastQ223 (Apr- Jun) ForecastQ323 (Jul – Sept) ForecastQ423 (Oct – Dec) Forecast
Standing Charge (£/day)0.280.310.310.30
Per Unit Costs (p/kWh)17.0615.8114.4914.22

–Ends

Notes to Editors

For more information, please contact: Verity Sinclair at v.sinclair@cornwall-insight.com

To link to our website, please use: https://www.cornwall-insight.com/

About the Cornwall Insight Group

Cornwall Insight is the pre-eminent provider of research, analysis, consulting and training to businesses and stakeholders engaged in the Australian, Great British, and Irish energy markets. To support our customers, we leverage a powerful combination of analytical capability, a detailed appreciation of regulation codes and policy frameworks, and a practical understanding of how markets function.