The energy price cap went up from £1,568 to £1,717 on 1 October 2024, but the energy consultancy forecasts that this will rise again – to £1,736 per year – for the average dual fuel bill from 1 January 2025.
Cornwall Insight predicted the unit charges would be 24.83p and 6.33p per kilowatt-hour for electricity and gas respectively.
If the prediction is correct, it would mean that energy prices stay high for the rest of the winter. The prediction has been described as “disappointing”, as in September, Cornwall Insight had expected the cap to fall back slightly in the new year.
Regulator Ofgem will announce the next quarterly cap – which will be in place from 1 January to 31 March 2025 – this Friday (22 November).
The energy cap limits the maximum price that can be charged for each unit of gas and electricity, rather than the total bill.
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UK energy prices have been high since Russia’s invasion of Ukraine in early 2022. Although down from their peak, energy prices have remained significantly higher than before the invasion, when the cap stood at £1,216 per year, and have been a major contributor to the cost-of-living crisis.
‘Another kick in the teeth for households’
The headline energy price cap figure of £1,736 means that a typical UK household would expect to pay that much each year. But, in practice, households will pay more or less depending on usage and, to a lesser extent, where they live.
Analysts at Cornwall Insight predicted that prices will drop slightly in April 2025 and again in October 2025, but it warned that “higher prices are likely the new normal”.
Craig Lowrey, a principal consultant at Cornwall Insight, said: “Our final price cap forecast for January indicates, as expected, bills will remain largely unchanged from October. Supply concerns have kept the market as volatile as earlier in the year, and additional charges have remained relatively stable, so prices have stayed flat.
“While we may have seen this coming, the news that prices will not drop from the rises in the autumn will still be disappointing to many as we move into the colder months.”
The consultancy also expects that prices will remain higher due to geopolitical tensions, bad weather and maintenance taking place on Norwegian gas infrastructure.
It said the market is still “very sensitive” to global events, with higher prices likely to be “the new normal”.
Richard Neudegg, the director of regulation at Uswitch, said: “Predictions that energy prices for those still on default tariffs will rise again in January are another kick in the teeth for households.
“The price cap is supposed to protect consumers, but millions face paying more during the coldest months of the year.”
