Quarterly price cap ‘could drive down energy bills’

Analysts have said frequent reviews of the price cap level could reduce bills by 5%

Big Zero Report 2022

The proposed quarterly price cap reviews could see householders pay less money for the amount of energy they use.

On Monday, Ofgem revealed a shake-up plan to adjust the price cap level every three months to reflect market prices more accurately and protect customers.

Analysts from Cornwall Insight have predicted that the proposals could bring a 5% reduction on their current forecast about the winter price cap.

Dr Craig Lowrey, Principle Consultant at Cornwall Insight, said: “Our initial view based upon the information and draft models provided by Ofgem – and given current market condition – is that the fourth quarter 2022 and first quarter 2023 will show an approximate 5% reduction on our current forecast, which under the existing seasonal methodology is around £2,750 per annum for winter 2022-23.

“However, due to the many variables which drive our forecasts and the potential for further updates from Ofgem on their plans, this is subject to change.”

Two weeks ago, and just a few hours before the Queen’s Speech, Cornwall Insight updated its latest price cap forecasts for the coming winter.

They predicted that energy bills could spike to nearly £2,600 per year in October.

On 1st April, the price cap rose from the previous level of £1,277 to £1,971.

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