Cornwall Insight has published its final forecast for the July to September default tariff cap, which will see a fall of 7% from the current price cap.
A combination of increases in the energy wholesale markets and updated assessments of policy costs and network costs mean that Cornwall Insight projects the typical dual fuel household to be paying £1,720 per annum for energy in July. This is a fall of £129 or 7% from the current price cap.
In April, Cornwall Insight predicted a larger drop of 9% for the price cap, which sets a maximum amount energy suppliers can charge for each unit of energy and standing charge on a standard variable tariff.
The energy consultancy foresees another drop for the October price cap followed by another in January 2026, but acknowledges a “range of factors” could change this.
Principal consultant at Cornwall Insight, Dr Craig Lowrey called the fall in the price cap a “welcome development” and a “step in the right direction”.
He added: “The fall is also a clear reminder of just how volatile the energy market remains – if prices can go down, they can bounce back up, especially with the unsettled global economic and political landscape we are experiencing.”
This sense has been echoed by several groups in response to the news. Abigail Ward, policy manager at the Energy Savings Trust pointed out that the lower price cap projection would still see households pay £100 more a year on their energy bills than last summer.
Jess Ralston, analyst at the Energy & Climate Intelligence Unit (ECIU), added that the predicted fall in energy bills just cancels out recent rises.
The price cap also factors in costs associated with the Contracts for Difference (CfD) process. As well as recently announced changes to the scheme, Ofgem said the price cap methodology will be updated to incorporate the cost of the Clean Industry Bonus (CIB), which is folded into the CfD cost, so that CIB payments are explicitly captured in daily and quarterly settlements between the LCCC and the generator. This means CIB costs will be fully factored into the supplier obligation levy so that the price cap is accurate.
The bonus provides financial support for offshore wind developers on the condition that they prioritise their investment in areas that need it most. It will come with an initial £27 million per gigawatt and be allotted through the CfD mechanism.
