Update: Ofgem has since announced there will be a 10% rise in the energy price cap from October.
Cornwall Insight forecasts a 9% rise in the new energy cap from October. Energy regulator Ofgem adjusts the price cap once every three months.
Ofgem is expected to announce the energy price cap for October 1st to December 31st later this week. The price cap sets a limit to what suppliers can charge per unit of energy and limits standing charges too.
The purpose of the price cap is to protect households from excessive costs. Ofgem reduces or increases the price cap based primarily on the wholesale cost suppliers face to obtain gas or electricity.
Recent Price Caps
The current average energy price cap per unit stands at £0.2236 per kWh for electricity and £0.0548 per kWh for gas. The daily standing charges are £0.6012 for electricity and £0.3141 in the case of gas.
With the above figures being averages, the effective price cap can differ by region and payment method. The type of meter a household utilises can also affect how the price cap applies to them.
The electricity price cap per unit fell by almost 9% from April 1st-June 30th to the July 1st-September 30th period. The price cap per unit of gas dropped by around 10% between the same two timeframes.
Next Price Cap Forecast
Despite this, the energy price cap (totaling gas and electricity bills in this case) is forecast to see a 9% rise between this period and the October 1st to December 31st period.
Cornwall Insight, known for making correct energy price cap forecasts, has cited rebounding wholesale energy prices as a reason for this prediction.
The analytics and consultancy firm also highlights global instability coined with the UK’s reliance on energy imports as a key consideration for an expected price cap increase.
The government’s current vision for a significant increase in renewable energy could help stem similar difficulties in the future. This is with Cornwall Insight noting a move to sustainable and domestically-produced energy as a key to making the UK less susceptible to price shocks further afield.