Price cap rises but is expected to increase further still: Commenting on today’s Ofgem announcement that the default price cap would increase by £96 to £1,138 for the six months effective from 1 April 2020, Robert Buckley Head of Relationship Development at Cornwall Insight, said:
“This is a substantial increase which negates all of the reduction in October’s price cap update. However, it is little surprise that we saw such a rise in the default price cap level today, due to the rebound in wholesale prices following the first lockdown. In fact, April Electricity Baseload prices have risen 16% from 1 December to present, with prices this period generally trending higher supported by continued cold weather and higher demand levels, despite lockdown restrictions.
“Although wholesale prices represent a large part of today’s increase, there are other factors at play. Ofgem’s £23.69 adjustment for bad debt and rises to some policy costs to support renewable generation will have no doubt compounded this rise.
“If wholesale price levels are maintained through the summer, early predictions from Cornwall Insight show that the Winter 2021-22 cap could see a further increase of approximately £14, assuming that the £23.69 Summer 2021 adjustment allowance is not carried on into next winter.”
Price cap rises but is expected to increase further still