Comment on Ofgem price cap
Jess Ralston is available for comment and interview.
By George Smeeton
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Commenting ahead of an announcement by energy regulator Ofgem on the new energy price cap [1], Simon Cran-McGreehin, Head of Analysis at the Energy and Climate Intelligence Unit (ECIU) said:
Whilst the falling price cap is a relief for households, this gas crisis will linger, with wholesale price forecasts suggesting that the average household energy bill might not get below £1,700 a year for the rest of this decade - that's around £600 (about 50%) above where it was before the gas crisis.
If we don’t get on with insulating homes, installing heat pumps and building more renewables, gas demand will remain high and that means bills will too.
Notes to editors:
1. Ofgem will announce its new price cap evaluation on Thursday, May 25.
2. The estimate of £1,700/yr is based on the following: Pre-crisis gas bill of c.£500, of which c.£200 was wholesale; and wholesale gas price expected to settle at 2.5-3x pre-crisis level for rest of this decade, i.e. c.£500-600/yr, for a total bill of £800-900/yr. Similarly, for electricity, pre-crisis bill was c.£600, of which c.£200 was wholesale; and that is expected to settle at 2-2.5x pre-crisis level, i.e. c.£400-500/yr, for a total of £800-900/yr. Non-wholesale costs are expected to remain comparatively stable. Electricity wholesale prices will settle lower than gas compared to pre-crisis levels, due to renewables and other sources that stop gas from always setting power prices. Payments from CfD renewables would cut the electricity bill further.
For more information:
George Smeeton, Head of Communications, ECIU, Tel: 07894 571 153, email: george.smeeton@eciu.net