Dan Atzori, Research Partner at Cornwall Insight:
“The energy announcements from the government’s Autumn Statement today will be felt across households, businesses and throughout the UK energy market.
“The extension of the Energy Price Guarantee (EPG) from April 2023, albeit at the higher £3,000 per year for an average consumer, will be a welcome shield from the higher price cap levels that would otherwise be faced. This will however come at a cost to the government, with Cornwall Insight forecasting that the full cost of the EPG will now be approximately £39bn. Despite the support, an average household bill in April 2023 will still be over £1,000 more than just 12 months ago. While some measures targeted at the most vulnerable were announced, given that these are one-off payments, it will be critical to reassess support going into next winter before longer-term reforms are introduced in 2024.
“Support for bills alone is neither sufficient, nor sustainable in the long-run, which makes the commitment to increase funding for household energy efficiency all the timelier. The government should use all the levers possible to bring down energy bills across the country, as it is demand as much as supply which will need to be curtailed if we are to stabilise energy costs and secure energy across the UK. We look forward to hearing more details on the energy efficiency taskforce.
“While the fears of some households may have been eased, the statement will have done little to alleviate the concerns of the thousands of businesses currently waiting to hear what support if any will be forthcoming after the Energy Bill Relief Scheme (EBRS) ends in April. With the government announcing today that support will be significantly lower than the current EBRS scheme, many will be worried for the viability of their business in the year ahead.
“Of course, all the commitments made today come with a price tag, and the extension of the Energy Profits Levy on Oil and Gas and the new 45% Electricity Generator Levy were announced as a way to, at least partially, cover the costs. Looking at the increases in power prices, the introduction of a windfall tax on renewables may appear to be fair and proportionate. However, a degree of caution is needed, as for example, the share prices across various renewables-heavy firms indicate they are not achieving the same level of windfall profits as Oil and Gas. There remains a danger that this measure will cost more than it raises and deter the volume of investment required to meet net zero, leaving consumer the net losers of this policy.”
Our latest Default Tariff Cap forecasts:
|Q1 2023 CI Forecast (Jan-Mar)||Q2 2023 CI Forecast (Apr-June)||Q3 2023 CI Forecast (July-Sept)||Q4 2023 CI Forecast (Oct-Dec)|
Notes to Editors
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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.