Cornwall Insight is predicting the winter price cap will increase by a further £600 beyond last week’s 54% jump.
The cap soared by £694 to £1,971 on 1 April largely due to record high gas prices, which increased by over 400% throughout 2021 due to a number of factors, including economies reawakening after COVID-19 lockdowns.
Gas prices have remained high throughout the first months of 2022, and the Russian invasion of Ukraine has made them still more volatile over the past month.
The research company noted that with four months to go until the winter cap is announced, the prediction is likely to again change, but that a significant increase now seems inevitable.
“Originally brought in to shield consumers from significant bill rises, the limitations of the Default Tariff Cap are once again being demonstrated, with our predictions showing energy bills could be set to double in just one year,” said Dr. Craig Lowrey, principal consultant at Cornwall Insight.
“The energy market is a different place even from two months ago, let alone four years ago when the cap was introduced, with these latest figures further highlighting that the cap serves to defer wholesale price increases – not eliminate them.”
He added that while government support will provide some respite for customers when the winter cap is increased, the scale and scope of it will need to be expanded given the continuing price cap increase.
In February, Chancellor Rishi Sunak unveiled three key measures to help support consumers, including a one-off repayable £200 loan, a £150 council tax rebate and a discretionary fund.
Since then, these have been criticised by political parties, charities and other organisations for failing to go far enough in light of the impact the increased price cap is having upon the number of fuel poor in the UK.
Prime Minister Boris Johnson is expected to release an energy security strategy on Thursday 7 April, providing further details on the country’s plans to mitigate surging costs and protect the UK from volatile international markets.
“High prices and volatile markets caused by geopolitical and economic concerns, will inevitably have an impact on our goal to increase renewables,” continued Lowrey.
“It is important that we lower bills for consumers and shore up energy supplies – which may mean looking at some compromises on the speed at which fossil fuels are phased out. However, ultimately we cannot let the current energy crisis derail our efforts to reach net zero by 2050 and the growth in low carbon and renewable energy.”