Cornwall Insight release price cap forecasts for 2024

The predictions for the Default Tariff Cap in this piece are out of date please click HERE to find our most up to date forecasts.

Prior to the introduction of the October – December 2023 Default Tariff Cap (price cap), Cornwall Insight has announced its forecasts for 2024.

Our new figures predict the price cap for a typical, dual-fuel, direct debit, household will rise by around 3.5% in January.

Under Ofgem’s old definition of average energy use, known as the Typical Domestic Consumption Values¹ (TDCV), which they used when they made the announcement of the October cap, this would see a typical price cap go from October 2023’s £1,923 per annum (new TDCVs £1,834) to the forecast £1,996 per annum (new TDCVs £1,897) in January 2024. It is then predicted to dip slightly in the second quarter of the year.

The January rise is largely down to the recent direction of wholesale prices, with volatility caused by the Australian LNG production strikes, which occurred over the last few weeks, being reflected in the predicted figures. Additionally, the first three months of the year are typically associated with higher wholesale prices, with this impacting our forecast of bills.

Figure 1: Cornwall Insight’s Default Tariff Cap forecasts using new Typical Domestic Consumption Values (dual fuel, direct debit customer)

Source: Cornwall Insight

Figure 2: Cornwall Insight’s Default Tariff Cap forecasts using old Typical Domestic Consumption Values (dual fuel, direct debit customer)

Source: Cornwall Insight

Figure 3: Default Tariff Cap forecasts, Per Unit Costs and Standing Charge (dual fuel, direct debit customer)

Source: Cornwall Insight

Note: All figures are national average unless otherwise stated. All intermediate and final calculations are rounded to two decimal places. Totals may not add due to rounding.

Dr Craig Lowrey, Principal Consultant at Cornwall Insight said:

The energy price cap has steadily declined over the past year, and while it is disappointing to see this trend stall, given the movements in the wholesale market of late it is not wholly unexpected. While the rise is small, it shows we cannot just assume prices will continue their fall and eventually reach pre-pandemic levels. Policies need to be put in place to deal with the possible situation that high energy prices have become the new normal.

Dealing with persistently high prices in this new energy landscape will not be achieved by a one-size-fits-all solution. The government possesses a toolbox of short- and medium-term options, including targeted support such as social tariffs or investment in energy efficiency, which could ease the burden on vulnerable households.

However, it is important we understand such assistance cannot overcome the effects of a volatile international energy market on bills. It is only by continuing our transition away from fossil fuels, towards secure and sustainable domestic energy sources that we can reduce our exposure to such international drivers and, in turn, stabilise our energy prices.”

Reference:

1. Ofgem’s old Typical Domestic Consumption Values (TDCVs) were 2,900 kWh per annum for electricity and 12,000 kWh per annum for gas. Following a consultation process, Ofgem has revised the TDCVs, from October 2023 it will be reducing them to 2,700 kWh per annum for electricity, and 11,500 kWh per annum for gas.

• Ends

Notes to Editors

For more information, please contact: Verity Sinclair at v.sinclair@cornwall-insight.com

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Want to keep up to date with Cornwall Insight’s price cap predictions? We have launched a dedicated webpage that will be regularly updated with our released predictions. This page also offers helpful answers to frequently asked questions about the price cap. Don’t miss out on this valuable resource – check out the page today: Predictions and Insights into the Default Tariff Cap

Want to keep up to date with Cornwall Insight’s price cap predictions?

We have a dedicated webpage that is regularly updated with our released predictions. This page also offers helpful answers to frequently asked questions about the price cap. Don’t miss out on this valuable resource – check out the page today: Predictions and Insights into the Default Tariff Cap.

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.