Prior to the Spring Statement, we at Cornwall Insight are releasing our latest predictions for the Winter 2022-23 and Summer 2023 default tariff caps. The figures, calculated on 18 March, show a significant drop from earlier in the month, with the Winter cap now predicted to be £2,512, a fall of nearly £400 since the 7 March £2,962 predictions.
The predictions would still see an average consumer’s energy bill rise by over £500 from the cap due to be implemented in April.
With the Russian invasion of Ukraine increasing wholesale prices and unpredictability in the European and global energy markets, it is hoped the Spring Statement will include further measures to help combat the impact of rising bills on consumers.
Figure 1: Cornwall Insight default tariff cap predictions (correct as of 18 March)
Gareth Miller, CEO at Cornwall Insight said:
“The fall in our Winter price cap predictions is clearly going to be welcomed given the much higher figures that have been circulating recently. However, we have to remember that even at these levels consumers will still be seeing a significant increase from what will already be a 54% uplift in April.
“Energy prices are very volatile and responsive to changing global events right now. There is a way to run until the level of the Winter cap will finally be known, and much could happen, but our forecast shows already that there is an obvious and real risk that household energy bills are likely to increase again in October.
“While the government has previously pledged to provide typical households with up to £350 of support, this announcement was made prior to the impact on commodity prices of the tragic events happening in Ukraine. The government may want to consider maintaining the same proportion of overall support that the initial measures delivered in order to avoid households having to swallow all of the increases in wholesale costs that have arisen since they were announced.
“The consequences of ever-increasing bills, arising from fossil fuel price increases, risks undermining confidence in energy policy generally. This is just at a time when we are likely to need more energy policy interventions and public support for them to continue the journey to net zero. Thus far polling reveals strong popular support for continuing decarbonisation, but that is before two energy bill rises this year that will focus public minds acutely on the issue of household costs and spending choices.
“The Spring Statement and the government energy security strategy really need to work in lock-step. The energy security strategy will need to consider levers and funding models for the medium and long-term measures across energy production and energy efficiency that will deliver net zero and energy security. The Spring Statement will need to deliver short-term relief for bill payers to maintain continued public confidence in energy policy. Both speak to the ability of government energy policy to deliver on costs and competence. The stakes are really very high indeed.”
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.