Cornwall Insight’s latest price cap prediction for Q4 2023 has decreased by £107.05 due to Ofgem revising its Typical Domestic Consumption Values (TDCVs).
TDCVs define the average household’s gas and electricity consumption. Usually reviewed every two years, the pandemic saw this review process temporarily halted.
From October the new TDCV will decrease from 2,900 kWh per annum for electricity to 2,700 kWh, and from 12,000 kWh per annum for gas to 11,500 kWh.
Reflecting this change, Cornwall Insight has decreased the forecast of energy prices per year for a typical household from £1,978.33 to £1,871.28 in Q4 2023 for electricity and from £2,004.4 to £1,900.52 for gas in Q1 2024.
Despite the welcome decrease, energy prices remain significantly higher than pre-pandemic levels.
Figure 1: Cornwall Insight’s Default Tariff Cap forecasts using new Typical Domestic Consumption Values (dual fuel, direct debit customer)
The change in TDCV also altered the organisation’s electricity and gas Per Unit Cost and Standing Charge predictions for Q4 2023 and Q1 2023.
Both the Standing Charge and Per Unit Cost predictions for electricity in Q4 experienced a slight decrease, as well as the Per Unit Cost of gas for the same period.
Per Unit Cost price predictions for both electricity and gas in Q1 2024 however, experienced a slight increase.
The Standing Charge for gas has remained the same throughout both periods.
Figure 2: Cornwall Insight’s Default Tariff Cap forecasts, Per Unit Cost and Standing Charge including VAT (dual fuel, direct debit customer)
“The fall in the average price cap predictions reflects Ofgem’s efforts to align with the evolving energy consumption patterns of typical households, as consumers respond to high prices, energy efficiency measures, weather conditions and other influences by reducing their energy usage,” said Dr Craig Lowrey, principle consultant at Cornwall Insight.
“While typical household predictions may provide some insight for consumers, households are still facing the challenge of bills that are well above historic levels. This situation brings us back to the question of the cap’s purpose – as doubts about the cap’s effectiveness in protecting consumers and its impact on tariff competition become a regular part of energy discussions.
“In light of this, it becomes crucial to explore alternative measures that can better protect consumers, promote fair competition, and ensure affordable and transparent energy pricing for all. The exploration of options such as social tariffs, energy efficiency initiatives, and various other avenues should be prioritised.
“Any reductions in the price cap should not diminish the sense of urgency in implementing necessary changes. The protection of vulnerable households from high energy bills remains a pressing issue that requires immediate attention.”
