Today our experts at Cornwall Insight are releasing their latest predictions for the average household’s Winter 2022/23 Default Tariff Cap, as the Summer 2022 54% rise comes into force.
The winter figures show a predicted increase of over £600 from today’s rise, and would mean that energy prices would have doubled in just one year.
With the invasion of Ukraine and subsequent sanctions on Russia causing volatile wholesale prices and at least four months to go until the Winter cap is announced, predictions for the cap are likely to change, however, significant cap rises look inevitable.
Figure 1: Cornwall Insight’s default tariff cap forecasts
|Winter 2022/23 CI Forecast||Summer 2023 CI Forecast|
Source: Cornwall Insight analysis
Cornwall Insight predicted the Summer 2022 price cap to within 3%, when it was announced in February.
Figure 2: Default Tariff Cap levels since 2018 and Cornwall Insight’s forecasts for the next three caps
Dr. Craig Lowrey, Principal Consultant at Cornwall Insight said:
“The price cap being brought in today is a significant increase from 2021, if Cornwall Insight’s predictions for the Winter 2022-23 cap are realised, households will be set for yet another significant hit to their finances in October. While the government’s £350 worth of support will provide some respite to consumers this time around – all-be-it not far enough – with the cap almost guaranteed to rise again, the government will need to look at expanding the scale and scope of this support after October at the very least.
“Originally brought in to shield consumers from significant bill rises, the limitations of the Default Tariff Cap are once again being demonstrated, with our predictions showing energy bills could be set to double in just one year. The energy market is a different place even from two months ago, let alone four years ago when the cap was introduced, with these latest figures further highlighting that the cap serves to defer wholesale price increases – not eliminate them.
“While today is rightly about the hit the Default Tariff Cap will have on consumers, there are more elements at play. High prices and volatile markets caused by geopolitical and economic concerns, will inevitably have an impact on our goal to increase renewables. It is important that we lower bills for consumers and shore up energy supplies – which may mean looking at some compromises on the speed at which fossil fuels are phased out. However, ultimately we cannot let the current energy crisis derail our efforts to reach net zero by 2050 and the growth in low carbon and renewable energy.”
Notes to Editors
For more information, please contact: Verity Sinclair at firstname.lastname@example.org
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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.