Forecasts for the October 2022 energy price cap escalated from £2,400 to around £3,000 following the conflict in Ukraine, according to a briefing published by the Energy and Climate Intelligence Unit (ECIU) on 28 February 2022 and last updated on 8 March 20221.
The briefing set out the sequence of cap levels. The cap was rising from £1,277 to £1,971 in April 2022, and had been expected to reach £2,400 in October 20221. The ECIU said the Ukraine conflict had escalated estimates to around £3,000 in October 2022, described as a £600 increase from previously expected levels, with gas driving the vast majority of the increase1. The briefing also noted that some doubt bills would get this high, because of significant data gaps needed to forecast future bill levels1.
The ECIU attributed the pressure to international gas markets rather than direct Russian supply. It said the UK gets just 5 to 6 per cent of its gas imports from Russia, via LNG tankers rather than pipelines, equal to 3 to 4 per cent of UK consumption, but that the UK is tied to international markets affected by a drop in global supply1. Russia is the second largest gas producer, at 17 per cent of global output in 20201. The briefing said gas prices quintupled in 2021 and that gas accounted for at least £500 of the April 2022 bill increase1.
The briefing contrasted gas and electricity. Gas is still used to generate 40 per cent of the UK's electricity and usually sets the price for all generators, so gas price rises feed into electricity prices about six months later through the next price cap1. It said gas bills rose 97 per cent between April 2021 and April 2022, while electricity prices rose just 54 per cent over the same period, which it credited to cheaper renewables cushioning electricity increases1.
| Cap level | Period | Status in the briefing |
|---|---|---|
| £1,277 | At the time of writing | In force |
| £1,971 | April 2022 | Announced |
| £2,400 | October 2022 | Previously expected |
| Around £3,000 | October 2022 | Escalated estimate |
The briefing also stated that by October 2022 all of the UK's 28 million homes were likely to have their bills limited by the price cap, as fixed price deals came to an end and the cap became the cheapest deal on the market1. It said analysis showed running an electric heat pump would be cheaper than operating a gas boiler from April, and that the Government had set a target to install 600,000 heat pumps per year by 20281. On energy efficiency, it said upgrading a home from EPC band D to band C on average reduces heat demand by 20 per cent, and that upgrading all band D homes to band C would cut total UK gas demand by 7 per cent and net imports by 15 per cent1.
Why it matters for households
The cap figure is the limit on what a supplier can charge a typical household on a default tariff, so a move from £2,400 to around £3,000 for October 2022 would have been a further step up in the unit costs behind most homes' bills, on top of the rise to £1,971 already announced for April1. The briefing's point is that the driver sits outside the UK's direct supply: the UK buys little Russian gas, but pays prices set in an international market where Russian supply matters1. That is the link between global events and UK energy prices and the wholesale prices behind bills.
For a household, the practical consequence described is that gas remains the price-setting fuel for both heating and 40 per cent of electricity, so gas volatility reaches electricity bills too, though the briefing says renewables have cushioned electricity rises relative to gas1. The measures it identifies as reducing exposure are the ones that cut the amount of gas a home needs: insulation and, where gas is displaced, heat pumps1. The briefing frames this as reducing demand and imports rather than as a route to a fixed lower price. The mechanics of how the level is set are covered in how the default tariff cap is set, and the levels to date in price cap history.
What happens next
The briefing gives no confirmed October 2022 figure, only an escalated estimate of around £3,000 against a previously expected £2,400, and notes doubt about how high bills will go because of data gaps in forecasting1. It states that by October 2022 all 28 million UK homes were likely to be covered by the cap as fixed deals ended1. No announcement date for the October 2022 cap is given in the briefing.