Cornwall Insight has predicted that bills could increase further in April 2025 owing to market volatility and price cap reforms.
The market research consultancy has forecast that the energy price cap could reach as high as £1,762 per year for a typical dual fuel, direct debit consumer – a 1% rise from January’s £1,738 price cap, announced in November.
Cornwall Insight blames this further potential rise in the price cap on movements in the wholesale market, particularly regarding continuing geopolitical tensions. These include Putin’s ongoing invasion of Ukraine and the resultant impact on gas imports from Europe, as well as investor and market hesitancy over the potential impact the upcoming presidency of Donald Trump will have on American fossil fuel markets.
Additionally, the announcement of potential reforms on the energy price cap, which could take effect as soon as April, are likely to have a damaging impact on energy prices, with the potential incorporation of allowances to cover the Energy Intensive Industries (EII) network exemption alone adding as much as £20 per year to the average consumer’s bill.
On a more positive note, Cornwall Insight’s current forecasts suggest energy bills could drop in July, although it is not known by how much. Additionally, the impact of recently announced extensions to four UK nuclear plants on wholesale prices – and therefore energy bills – cannot yet be established.
Dr Craig Lowrey, principal consultant at Cornwall Insight said: “Energy bills in 2025 are shaping up to reflect a perfect storm of regulatory changes and market turbulence, in addition to any broader sector reforms put forward by the new government. While the wholesale market will remain a key driver of prices, Ofgem’s reforms and the introduction of new charges could raise costs further for households. What we do know is that the market is unlikely to lower bills, and affordability and fuel poverty will continue to be a pressing issue. This underscores the need for policymakers and suppliers to prioritise supporting vulnerable consumers.”
Commenting on the news, Jess Ralston, head of energy at the Energy and Climate Intelligence Unit (ECIU) said: “Energy bills remaining high into the new year makes it clear that the current crisis is not over, with households continuing to feel the price of reliance on gas. Reducing gas demand by getting on with the Future Homes Standard and ramping up the Warm Homes Plan’s insulation schemes will stop the UK needing to import more from abroad as the North Sea output continues its inevitable decline.”
