Cornwall Insight has estimated that the new cap will be set at £3,294 equivalent per year for the average household.
However, due to the Energy Price Guarantee (EPG), consumers will not be directly impacted by the price cap, as the government will limit a typical household’s energy bill to £3,000 equivalent per year.
This is a rise from the current rate of £2,500, meaning that consumers will be forced to pay more despite the fact that wholesale prices are down.
If the forecast is correct and the level of the EPG is lower than the April price cap, the government will pay suppliers the difference. The greater the disparity between the cost of the two schemes, the higher the governmental expense. The rise in the EPG is estimated to save the government approximately £2.6bn across the entire scheme.
Last year, Ofcom proposed to review the price cap every three months, instead of twice a year, in an attempt to bring down prices for consumers sooner, or raise...