Consultancy firm warns that energy bills could hit £3,300 in 2023

Cornwall Insights have warned that the price cap could rise even further than previously thought when it is next adjusted in October.

The energy consultancy firm had recently projected that bills would rise to £3,000 in the Autumn. However, a new prediction made on the 8th of July puts the final figure at £3,244. Unfortunately, April 2023’s adjustment does not appear to hold any respite either, with a slight increase to £3,363 forecast. While Cornwall Insights conceded that much could change in the coming months, some price hikes appear inevitable.

"There is always some hope that the market will stabilise and retreat in time for the setting of the January cap,” said Dr Craig Lowrey, a principal consultant at Cornwall Insight.

"However, with the announcement of the October cap only a month away, the high wholesale prices are already being “baked in” to the figure, with little hope of relief from the predicted high energy bills."

“As the energy market continues to grapple with global political and economic uncertainty, the corresponding high wholesale prices, and the UK’s continued reliance on energy imports has once again seen predictions for the domestic consumer default tariff cap to rise to what are even more unaffordable levels.”

Energy prices started rising significantly towards the back end of 2020. This predominantly due to muted wind output in Europe and several Asian nations' increased demand as they came out of lockdown. The issue in the UK was exacerbated by poor domestic output coupled with low storage capacity, meaning that Britain was especially vulnerable to the increasingly hostile market conditions.

As wholesale prices rose, numerous energy companies, unable to pass costs onto customers due to the price cap, began to go under. 2021 alone claimed nearly 30 casualties. The largest of these was Bulb, which, due to its size, was placed into special administration by the government.

However, when April hit, Ofgem increased the price cap by 54%. This means that the average UK household is paying nearly £2,000 a year for their gas and electricity. Unfortunately for Brits, the hike in bills isn’t the only thing costing them more, as petrol, groceries and rental prices all climb.

To mitigate this, the government recently announced a range of emergency measures. These come into effect this weak and include one-off payments of £650 to all domestic energy customers, as well as additional support to lower-income and vulnerable households.