Research consultancy firm Cornwall Insight has released its forecast for the January 2025 energy price cap, predicting a very slight fall.
Ahead of the upcoming rise in the energy price cap for the last quarter of 2024, which comes into effect tomorrow (1 October), Cornwall Insight suggests that January 2025’s price cap will sit at £1,697 for the average dual fuel household, down 1% from the Q4 2024 cap of £1,717. Prices are also expected to decline slightly in Q2 and Q3 of 2025.
Previous Cornwall Insight forecasts had predicted the price cap would rise in January 2025. However, the firm’s analysis has suggested that a combination of the EU meeting its gas storage targets, strong global supplies of liquid natural gas (LNG), and improved market confidence has caused wholesale market prices to fall slightly.
Dr Craig Lowrey, principal consultant at Cornwall Insight said: “While households will have to endure a rise in the cap from October, our current forecasts suggest that this is a temporary blip. January to March, typically some of the coldest months of the year, often bring with them the biggest energy bills, and – while our latest forecast is welcome news – it remains subject to the volatile wholesale gas and electricity markets.
“It’s important the government and other stakeholders look at actions they can take to shield vulnerable consumers whether this be targeted direct support, or changes to the bill system through additions such as social tariffs. Not everybody can wait for renewables energy savings to kick in.”
The energy crisis continues
While this is welcome news, households will still need to bear the brunt of the imminent Q4 2024 cap rise, which industry experts noted was a signal that the UK is “not out of the woods yet” regarding the energy crisis.
On this, Lowrey said: “While the negligible quarter-on-quarter drop is welcome, it must be remembered that bills will still remain hundreds of pounds above historic levels. While there is hope that a renewed focus on building a sustainable domestic energy supply could eventually lower bills as we reduce reliance on volatile imports, these benefits will take time to materialise. Meanwhile, many people are facing financial difficulties right now.”
The impact of the energy crisis which began in 2022 following Putin’s invasion of Ukraine is still sending UK energy consumers reeling, with bills remaining high. In response, a new commission made up of energy experts has been formed in order to protect the nation from future energy crises. The Energy Crisis Commission’s (ECC) members, who include leading figures from Energy UK, National Energy Action (NEA) and Citizens Advice, will seek to learn lessons from the energy crisis and will make high-level policy recommendations to ensure the UK can better withstand future energy price volatility.
Meanwhile, the UK’s energy regulator, Ofgem is carrying out its own examination of the UK’s energy pricing systems to ensure that consumers are being fairly charged. The energy watchdog recently opened a call for input from the public into standing charges on energy bills, following a previous public consultation which received 30,000 responses. An overwhelming majority of responses to the first consultation called for standing charges to be abolished, with 90% believing that standing charges are “unfair”.
