Following the closure of the observation window on 17 February, Cornwall Insight has confirmed its final prediction for the April Default Tariff cap is £3,294 equivalent per year for a typical household.
Consumers will be able to benefit from the Energy Price Guarantee (EPG) limiting a typical households yearly energy bills equivalent to £3,000 in April – a £500 raise from the current EPG.
As the forecast price cap is higher than even the increased EPG, annual consumer bills will jump by at least £500 (20%). This figure is set to rise at the conclusion of the energy rebate scheme in March, meaning that households will see minimal benefit before July.
If the EPG is lower than the April price cap as predicted, Cornwall Insight said that raising the EPG to £3,000 will save the government – and by extension tax payers – £2.6 billion in differentiation costs.
Furthermore, if the Q3 and Q4 predictions are accurate, the government will not incur any EPG scheme costs during this period.
The forecast is brighter in the second half of the year following the notable fall in price cap predictions to below the government support price for the first time since the EPG’s introduction in October.
The combination of falling wholesale prices and an increased EPG may see competitive tariffs return, allowing consumers to take back some control over their energy bills, said Cornwall Insight.
Although outcomes are subject to market volatility, current indications show a more positive outlook for consumer energy bills.