The predictions for the Default Tariff Cap in this piece are out of date please click HERE to find our most up to date forecasts.
Cornwall Insight has unveiled its latest forecasts for the Default Tariff Cap (price cap) covering the period October 2023 (Q423) to September 2024 (Q324). The predictions, calculated from Ofgem’s updated Typical Domestic Consumption Values1 (TDCV), indicate relatively small fluctuations throughout the year compared to the same period last year. The cap is expected to remain significantly above pre-pandemic levels for the foreseeable future.
As of October 2023, the price cap for a typical dual fuel, direct debit consumer is forecast to reduce to quarter-on-quarter to £1,860. Following this initial dip, the cap is projected to rise to around £1,960 in January, before experiencing small decreases in March and July2.
Figure 1: Cornwall Insight’s Default Tariff Cap forecasts using new Typical Domestic Consumption Values (dual fuel, direct debit customer)
| QUARTERLY | New TDCV | Q4 2023 Forecast | Q1 2024 Forecast | Q2 2024 Forecast | Q3 2024 Forecast |
|---|---|---|---|---|---|
| Electricity | 2,700 kWh | £944.50 | £976.63 | £959.55 | £929.18 |
| Gas | 11,500 kWh | £916.16 | £982.18 | £957.19 | £941.25 |
| TOTAL | £1,860.66**** | £1,958.81**** | £1,916.74**** | £1,870.43**** |
Source: Cornwall Insight, calculated from market close figures 24/07/2023
Figure 2: Cornwall Insight’s Default Tariff cap forecasts using new Typical Domestic Consumption Values: Standing charge and unit rate (dual fuel, direct debit customer)
| Electricity | Q423 Forecast | Q124 Forecast | Q224 Forecast | Q324 Forecast |
|---|---|---|---|---|
| Standing Charge (£/day) | 0.50__ | 0.50__ | 0.57__ | 0.57__ |
| Per Unit Costs (p/kWh) | 28.27__ | 29.46__ | 27.83__ | 26.70__ |
| Gas | Q423 Forecast | Q124 Forecast | Q224 Forecast | Q324 Forecast |
| Standing Charge (£/day) | 0.29__ | 0.29__ | 0.29__ | 0.29__ |
| Per Unit Costs (p/kWh) | 7.06__ | 7.63__ | 7.39__ | 7.25__ |
Source: Cornwall Insight, calculated from market close figures 24/07/2023
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 news of a relative stabilising of energy bills will no doubt leave households with mixed feelings. After the surge in bills seen last winter, it may bring a sense of relief to people that energy prices are currently not forecast to surge unexpectedly. However, there will also be disappointment with prices still well above the levels seen a few years ago – leaving many longing for more affordable options.
The wholesale market remains the main driver of bills, and unfortunately there is no immediate prospect of prices there returning to historic averages. Therefore, it becomes imperative the government and other stakeholders explore alternative measures to cater to consumers. This includes options to provide targeted support to the most vulnerable while promoting flexible energy solutions that encourage efficient energy usage.
Moreover, we must remain committed to funding the transition to renewable energy sources and maintaining our net-zero targets. By doing so, we can establish a stable and secure energy supply that is less susceptible to fluctuations in the international market.”
- Ends
Notes to Editors
- Following a consultation process, Ofgem has revised the TDCVs, from October it will be reducing them from 2,900 kWh per annum for electricity to 2,700 kWh, and from 12,000 kWh per annum for gas to 11,500 kWh – these new numbers are now reflected in our forecast assumptions.
- The forecast figures for a typical dual fuel, direct debit consumer cannot be directly compared to the current level of £2,074, this is due to Ofgem’s revision of the TDCVs from October. If the current TDCVs were kept unchanged, the figures would be as follows:
Figure 3: Cornwall Insight’s Default Tariff Cap forecasts using old Typical Domestic Consumption Values (dual fuel, direct debit customer)
| QUARTERLY | Old TDCV | Q4 2023 CI Forecast | Q1 2024 CI Forecast | Q2 2024 CI Forecast | Q3 2024 CI Forecast |
|---|---|---|---|---|---|
| Electricity | 2,900 kWh | £1,013.17 | £1,045.71 | £1,027.59 | £994.04 |
| Gas | 12,000 kWh | £952.65 | £1,020.74 | £996.04 | £978.02 |
| TOTAL | £1,965.82 | £2,066.45 | £2,023.63 | £1,972.06 |
Source: Cornwall Insight, calculated from market close figures 24/07/2023
For more information, please contact: Verity Sinclair at v.sinclair@cornwall-insight.com
To link to our website, please use: https://www.cornwall-insight.com/
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.
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
"The wholesale market remains the main driver of bills, and unfortunately there is no immediate prospect of prices there returning to historic averages."
Dr Craig Lowrey Principal Consultant
