The government should bring in fresh measures to provide support for customers with energy bills set to stay high until at least next winter, warned forecasting group Cornwall Insight.
Dr Craig Lowrey, principal consultant at Cornwall Insight, argued that it was “imperative” the government and the wider industry provided more financial relief for customers struggling to pay bills over the coming months.
“This includes options to provide targeted support to the most vulnerable while promoting flexible energy solutions that encourage efficient energy usage,” he said.
Downing Street has not announced plans for fresh household and business support packages this winter, with customers expected to rely on the existing benefits system after the Energy Price Guarantee expired last month.
However, Cornwall Insight has confirmed energy bills will stay historically elevated until at least the fourth quarter of 2024, in its latest updates to its price cap predictions.
It expects the price cap, currently set at £2,074 per year by regulator Ofgem, to fall to £1,861 per year in October – reflecting falling gas prices this year.
Following this initial dip, the cap will then rise to around £1,960 in January 2023 before experiencing small decreases in the April and July updates.
While this is well below the monster £4,279 per year price cap during the first quarter of 2023, it is still significantly above the £1,000-£1,200 norms before the domestic energy crisis and Russia’s invasion of Ukraine.
Lowrey argued that the wholesale market remains “the main driver of bills” and that there is “no immediate prospect of prices returning to historic averages.”
“The news of a relative stabilising of energy bills will no doubt leave households with mixed feelings. After the surge in bills seen last winter, it may bring a sense of relief to people that energy prices are currently not forecast to surge unexpectedly. However, there will also be disappointment with prices still well above the levels seen a few years ago – leaving many longing for more affordable options,” he said.
This comes with energy retailers reporting bonanza profits following Ofgem’s generous tinkering with allowances for suppliers looking to recoup costs from the crisis.
It also follows Bill Bullen, chief executive of Utilita Energy, calling for more support this winter.
He told City A.M. there was a risk of more problem with affordability for customers this winter than last year.
Lowrey also called on the government to remain committed to net zero, warning that without ramping up renewable energy sources it would be hard to “establish a stable and secure energy supply that is less susceptible to fluctuations in the international market”.
When approached for comment, a Department for Energy Security and Net Zero spokesperson said: “We covered around half a typical household’s energy bill over winter and with costs falling from next month as the new price cap kicks in, the Energy Price Guarantee will remain in place as a safety net through to April 2024 – with additional help targeted at the most vulnerable.
“As set out in the autumn statement, we’re working with consumer groups and industry to assess the best long-term approach to helping vulnerable households, as part of wider market reforms.”