An industry expert has warned against complacency following the latest forecast predicting a price cap of around £2,500 later this year.
On Thursday (12 January) Investec analyst Martin Young said the firm was now predicting the default tariff cap will fall to £2,478 in July before rising slightly to £2,546 in October, both way below the government’s revised £3,000 Energy Price Guarantee (EPG).
Ultimately, Young estimates the cost to the government in 2023/24 to fall to c.£2.3 billion against its previous estimate of c.£3 billion.
Investec said its estimates are based on a continuation of the 1.9% EBIT allowance in the tariff cap, but Ofgem has just closed a consultation on changing this.
Despite the forecast Andrew Sissons, deputy director for sustainable future at innovation charity Nesta, warned that many customers will still be facing significantly high energy costs compared to historic levels.
He told Utility Week: “I think it’s really important to say a couple of things. One is that gas prices can go up as well as down, as we know, and it’s really important not to just assume that the crisis is over and everything will go back to normal because a lot of the conditions that created the problem in the first place are either still present or they’re liable to flare up.
“The second thing to remember is that even on the Investec forecast, you’re still talking about people paying two and a half times more for energy for a typical household than you were before this crisis. That is a huge amount of money which, frankly, most households can ill afford.”
Sissons highlighted the fact that the government is increasing the EPG in April when the £400 rebate is also due to come to an end, meaning bills will still seem as if they are increasing for many.
He added: “What that means is, firstly, we can’t be complacent and assume that the crisis has gone away and we can move on to other things.
“And secondly it means that we need to keep focusing on our efforts to use less gas…to use gas more efficiently, but it also means trying to switch away from gas boilers and gas-fired power towards renewable electricity and electric, low carbon heating like heat pumps.”