New energy price cap warning.

 

In another blow to household budgets, the latest industry forecasts suggest energy bills could rise to £4,266 a year from January.

 

Cornwall Insight, the energy consultant, is warning about a significant domestic energy price cap rise.

 

If their forecasts prove accurate, the average household would see their combined electricity and gas bill rise from £164 a month to £355 a month.

 

The driving force behind the vast projected increase is a decision by the energy regulator Ofgem to change the price cap every three months, along with higher wholesale prices.

 

Ofgem responded to the forecast by saying that no estimates for next year could be robust at this early stage, which means the figures have limited value. The regulator said:

 

“We cannot stop others from making predictions, but we would ask that extreme caution is applied to any predictions for the price cap in January or beyond.”

 

The energy price cap is the maximum amount suppliers can charge for average energy use in England, Scotland and Wales.

 

Ofgem is to announce the price cap amount for October by the end of this month.

 

Cornwall Insight is expecting the October price cap to be £3,582 a year, up from the £2,800 predicted by Ofgem.

 

Dr Craig Lowrey, the principal consultant at Cornwall, explained that its price cap forecasts have been rising steadily, but this latest estimate was a fresh shock.

 

In response to rising energy prices, the government has already announced a package of financial support for households in England, Scotland and Wales, each receiving £400 of energy bill discounts this autumn.

 

With the energy price cap now forecast to rise by more, the government is facing renewed calls to review the support package and provide additional discounts to households to help them manage energy costs.

 

Dr Lowrey from Cornwall Insight said:

 

“If the £400 was not enough to make a dent in the impact of our previous forecast, it most certainly is not enough now.

 

“The government must make introducing more support over the first two quarters of 2023 a number-one priority.”

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