Energy consultancy Cornwall Insight has released its forecast for January – March Q1 2025 default tariff cap (price cap), setting it at £1,736 per annum.
Cornwall Insight’s observation window closed on 15 November, leading it to project the 1% increase on the current price cap of £1,717. Ofgem will announce the official price cap on 22 November.
Pricing is set to remain high for the rest of the winter period, reflecting a volatile wholesale market, although prices have stabilised compared to the previous two years. Although Cornwall Insight does see the price cap falling in April 2025 and again in October 2025, it emphasised the importance of the government stepping in to protect those most vulnerable to higher costs.
This could come in the form of reform to the price cap mechanism, as Ofgem is currently undergoing a review that could see changes to elements such as the standing charge. The energy regulator launched a consultation on 25 March on developing the price cap so customers remain protected as the energy market evolves to a smarter, more flexible system.
As the government is beginning to acknowledge, the transition to clean energy generated in the UK promises to bring down energy bills in the long term. The Energy Crisis Commission (ECC) recently published a report showing that the UK was worst hit in Europe during the energy crisis that began in August 2021, because the nation was particularly exposed to supply disruptions and price spikes on international markets.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said the rise is “as expected” and that “supply concerns have kept the market as volatile as earlier in the year”.
He continued: “With it being widely accepted that high prices are here to stay, we need to see action. Options like social tariffs, adjustments to price caps, benefit restructuring, or other targeted support for vulnerable households must be seriously considered.
“Long-term, our transition away from the volatile global wholesale market toward sustainable, home-produced renewables can help to secure our energy future. Although the transition does require upfront investment, it promises lower bills down the line. The government needs to keep momentum on the transition while acknowledging that immediate support is essential for those struggling now. Inaction is a choice to leave people in the cold.”
The government’s Autumn budget saw the Warm Homes Plan formally been allocated £3.4 billion over the next three years to support heat decarbonisation and household energy efficiency. This includes a major funding uptick for the Boiler Upgrade Scheme, as well as a boost to the heat pump manufacturing sector.
Predicting the same rise as Cornwall Insight, energy retailer EDF launched a 12-month fixed-rate energy tariff, which it claims is the cheapest available among the UK’s major energy suppliers. However, EDF notes the deal could be removed at any time due to volatility in global wholesale prices.
