Price cap predicted to rise by at least £66/year

Price cap predicted to rise by at least £66/year: The latest forecasts from Cornwall Insight indicates that the default tariff price cap will increase by approximately £66 from April 2021 to £1,108 per year for a typical dual fuel direct debit customer – from its current level of £1,042.

Robert Buckley Head of Relationship Development at Cornwall Insight, said:

“Cornwall Insight modelling suggests it now looks likely that we will see a substantial rise in the summer price cap period, completely reversing the fall that was seen in October. This increase was driven mainly by a rebound in the wholesale cost of energy over the latter part of 2020 and into 2021. For example, April Baseload prices have risen 16% from 1 December to present.

“Wholesale prices have been boosted by a combination of factors including rising worldwide energy costs and recovery of UK prices from the ground that they lost in Summer 2020 under the first COVID-19 lockdown period. In addition to this, is the impact of the current winter weather conditions on the market.

“While wholesale costs constitute a large proportion of the potential rise, there are other influences at play, including an increase in some of the policy costs in place to support renewable and low-carbon electricity generation.

“This upward movement has been mitigated slightly by the fact that a one-off £15 COVID-related cost element in place for the Winter 2020-21 cap is now no longer present in the calculations for Summer 2021.

“However, Ofgem is currently consulting on introducing an additional charge for COVID-19 related bad debt. The regulator has estimated this to be a £21 charge for Summer 2021. This would represent a further rise to our predict view.

“Currently, competitive tariffs are priced around £180 below the current level of the cap, so customers can still make savings, especially if they are on a Standard Variable Tariff. So, it would be wise to check their deals before the price cap rises.

“The COVID-19 pandemic has brought a unique set of circumstances for suppliers having a difficult situation to juggle, facing higher wholesale costs and bad debt levels rising. Now, they will be assessing their commercial strategies closely. The decision of what to do is not a simple one, with fragile balance sheets, varying hedging strategies, and rising policy and network costs mean there is no one-size-fits-all answer.”

Price cap predicted to rise by at least £66/year

, , , , , , , , ,
Previous Post
North South split on installing on-street EV charging
Next Post
Scientists caution not all tree planting is beneficial

Related Posts

Gas supplier tax for green gas production plants proposed

Gas supplier tax for green gas production plants proposed: A new levy has been proposed by the Government to be placed on gas suppliers across the UK to fund the construction of biomethane or ‘green gas’ production plants. Environmentally-friendly organic waste products are used to produce the green gas which will help reduce emissions from…
Read More

Accenture invests in power & grid tech business

Accenture invests in power & grid tech business: Accenture has made a clever investment and built an alliance with Reactive Technologies, a London-based provider of power & grid technology. Reactive Technologies offers measurement, real-time analytics and data services that can help grid operators and other energy market players address the challenges of effectively integrating the…
Read More
Menu

Subscribe to our newsletter!

You have successfully subscribed to the newsletter

There was an error while trying to send your request. Please try again.

British Utilities will use the information you provide on this form to be in touch with you and to provide updates and marketing.