Gas prices soared on Monday, prompting even higher price cap forecasts
The energy price cap could soar to more than £6,500 next spring, according to the latest forecast for household bills.
After a spike in gas prices on Monday, consultancy Auxilione has suggested that regulator Ofgem’s price cap could rise to £6,552 in April 2023.
This comes just days after their previous estimate of £6,089.
Before the £6,500 peak, Auxilione predicts that yearly energy bills will rise to £3,576 from October 1, and £5,066 in January 2023.
Ofgem will announce the price cap for October on August 26.
The price cap was first introduced in 2019 and sets a limit on the rates suppliers can charge for each unit of gas and electricity used by a household, for those on variable-rate energy deals paying by direct debit.
It also sets a maximum for the daily standing charge, the fee you pay to have your home connected to the grid.
The current price cap for average use is £1,971, and is revised every three months, in January, April, July and October.
Auxilione is now forecasting that the price cap will not peak until next April, when it will fall back slightly, hitting £5,897 in July 2023 and £5,548 three months later.
“The nervousness of the market appears to increase day by day as we edge closer to winter delivery, now just five weeks away, and no big positive news on the horizon,” Auxilione said. “The planned outages in a week’s time have captured the attention of the market and are driving concerns further – as yesterday’s market activity demonstrated.”
On Monday, leading investment bank Citi warned inflation will rise as high as 18.6 percent next year, but this was based on lower estimates of what the price cap will rise to next year.
After forecasts that the price cap would be raised to £4,657 in January and then £5,816 in April, the bank said inflation would ‘enter the stratosphere.’
Wholesale gas prices rocketed on Monday after Russia said it would carry out maintenance on a key gas pipeline connecting the country to Germany, the Independent reports.
Gazprom said the Nord Stream 1 pipeline will be shut off entirely for maintenance for three days next week, but there are concerns from experts that they may not reopen the pipeline in an attempt to put pressure on Europe’s economies.
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