Cornwall Insight published new forecasts on 9 August 2022 showing the default tariff price cap rising to £3,582 for October 2022, £4,266 for January 2023 and £4,426 for April 2023, before easing to £3,810 in July 2023 and £3,781 in October 20231. The figures are for an average annual dual fuel bill. The same table records the cap in force at £1,277 in October 2021 and £1,971 in April 20221.
The forecasts are a sharp revision of Cornwall Insight's June 2022 numbers, which put October 2022 at £2,980, January 2023 at £3,003 and April 2023 at £2,7581. An interim update on 8 July had already lifted the October and January figures to £3,245 and £3,634, an average of £3,3042.
ScottishPower chief executive Keith Anderson responded to the forecasts on 14 August 2022, setting out proposals for targeted support and a government-backed deficit fund to cover the gap between what households pay and the cost of supply, repaid over 10 to 15 years1.
"Reducing these households' bills by a further £1000 or so would take the sting out of the rising costs of energy immediately."
Separate analysis by the Energy and Climate Intelligence Unit, published 14 July 2022, attributed over 90% of the rise in bills to wholesale gas costs, adding around £2,000 to the average bill. It put the direct wholesale gas effect at around £1,200 on gas bills, an increase of over 500% on pre-crisis levels, and over £700 on electricity bills through the power market, an almost 400% increase. A further £100 was attributed to the £2.7bn collapse of more than thirty suppliers, not counting the £1.9bn taxpayer cost of Bulb Energy's special administration2.
The ECIU analysis also noted that levies funding insulation for low-income households and early renewables projects were set to remain stable into the winter at around £155, and that VAT at 5% would add just over £100 against pre-crisis levels2. It said the ECO insulation scheme was knocking £600 off the bills of fuel poor households, and that energy efficiency schemes had contributed savings of £1.2bn per year under then-current prices2.
| Date of cap | Cornwall Insight estimate, August 2022 | Cornwall Insight estimate, June 2022 |
|---|---|---|
| Oct 2022 | £3,582 | £2,980 |
| Jan 2023 | £4,266 | £3,003 |
| Apr 2023 | £4,426 | £2,758 |
| July 2023 | £3,810 | £2,865 |
| Oct 2023 | £3,781 | not given |
Source: Cornwall Insight price cap forecasts, 9 August 20221
Why it matters for households
The price cap sets the maximum a supplier can charge a typical household on a default tariff, so the forecasts translate directly into what a home pays. On these numbers, a household on the October 2022 cap would face a bill roughly three times the £1,277 level of October 20211. The ECIU analysis places the cause overwhelmingly on gas: over 90% of the increase, with wholesale gas adding around £2,000 to the average bill2. That matters for energy independence because it shows how far a home's costs are set by a fuel the UK imports at prices it does not control. The same analysis notes that new renewables were set to pay back £1.3bn up to spring 2023 through Contracts for Difference, and that hitting the 50GW offshore wind target would take savings to £34bn per year in a future gas crisis, equivalent to £500 per household2. The history of the cap shows how far these levels sit above earlier ones.
What happens next
The October 2022 cap takes effect at the start of October, and future caps run for three months each rather than six2. Ofgem's chief executive Jonathan Brearley told MPs in July 2022 that the October to December cap would rise by more than the £800 previously predicted, to reach £2,8002. ScottishPower's proposals for a deficit fund and, later, a social tariff replacing the cap have been set out but not adopted1. No decision on either has been reported.