The latest forecast from Cornwall Insight indicates that the default tariff price cap will increase by more than £100 for the Winter 2021-22 cap to around £1,250 per year for a typical dual fuel direct debit customer – from its current level of £1,138.
Dr. Craig Lowrey, Senior Consultant at Cornwall Insight, said:
“Cornwall Insight modelling suggests it now looks likely that we will see a substantial rise in the winter price cap period. This is because GB has experienced a considerable rise in wholesale energy costs, rising to some of the highest seen since the Beast from the East in 2018.
“Wholesale prices have been hit by a combination of factors. Underlying commodity prices have risen, so, too, have carbon prices reaching a high of €50 per tonne of carbon and more than doubling over the past year.
“On top of this, underlying gas prices have risen considerably due to a cold winter across Europe and low levels of gas in storage facilities. Moreover, the rising carbon, oil and LNG prices have further supported this rise in underlying gas prices. More generally, we are experiencing tighter power supply margins than last winter due to unforeseen and prolonged outages of several ageing fossil fuel and nuclear plants.
“While competitive tariffs are priced around £250 below the level of the cap. With a substantial increase in the wholesale price, it is extremely likely to expect this to be passed through fairly quickly in terms of prices to new customers.
“Although there are still several uncertainties in terms of potential legislative changes and the continued impact of COVID-19 that will impact our forecast – and which will be resolved in the coming weeks and months – the sharp rise in the wholesale market looks set to be the primary driver behind the anticipated increase in the price cap.”
Notes to Editors
For more information, please contact: Charlotte Nelson at c.nelson@cornwall-insight.com
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