Household price cap due to increase in January 2024

The price that most households in the UK pay for their electricity and gas is forecast to go up by 5% on 1st January 2024, according to Cornwall Insight.

In their final forecast, they predict that for the period of January through to end of March 2023, the default tariff cap will go up by 5% to £1,931.00 for a typical dual fuel household. This is an increase from the current cap of £1,834.00.

As reported a lot over the last few months, this increase is attributed to wholesale energy market volatility being driven by geopolitical concerns including disruptions to gas from Scandinavia, the Israel-Hamas conflict and industrial action in Australian gas production facilities.

All of these have had a significant affect on the price of gas which the UK still heavily relies on for its default energy source for both heating as well as electricity generation, with 35% the UK’s electricity demand on average currently coming from gas.

While mild weather so far this winter has helped short term prompt prices, this has had a little affect on gas prices from January onwards.

Slightly better news as we approach spring 2024, the cap is expected to reduce, although it will remain elevated compared to historical levels.

Looking ahead to the second 2024 cap period (April-June), Cornwall Insight anticipates an 8p per day increase in electricity standing charges, influenced by the ongoing reform of network charges to meet the increases born from creating a more sustainable and renewable future.

This shift from per unit to per day charges means customers will incur these costs regardless of their actual consumption.

The official cap announcement by Ofgem for January to March is scheduled for 21st November 2023.

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