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Electricity price predictions

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Electricity, Tariffs, Monitoring, Electrics & Providers

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MattEngineer

(@mattengineer)

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Topic starter 03/12/2021 7:39 pm [#199]

When the energy cap comes up for renewal I think it will rise to 26.5p per unit, any thoughts of the collective?

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Kev M

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03/12/2021 8:31 pm

Posted by: @mattengineer

When the energy cap comes up for renewal I think it will rise to 26.5p per unit, any thoughts of the collective?

30-40% increase. If we're having a sweepstake I'll go for 27p. 😉

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Mars

(@editor)

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03/12/2021 11:25 pm

An interesting, if not potentially horrifying, game. I think it'll be around 25p/kWh – I'm being cautiously optimistic.

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prjohn

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04/12/2021 11:00 am

Ofgem is having talks with the Electrical companies (obviously to protect profits). There is no indication that gas markets are going to improve over the next 3 months. I think Ofgem will take an approach to protect the profits of electricity providers (they don't want any more going bust) so my prediction is closer to 30p. So my guess is 28.5p

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Mars

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04/12/2021 11:34 am

@prjohn, I wouldn't be surprised if it did rise to around that mark. The market is an absolute mess, and I can't see how this is tenable from a homeowner's perspective. If the government's objective is to keep the big players afloat, then the fee I've seen discussed to make electricity profitable at the current market 'value' is for the tariff to be around 45p/kWh.

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Kev M

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04/12/2021 12:02 pm

Remember the cap is just that. I don't think we'll see a return to the very cheap fixes of the last couple of years but we may see some fixed deals a bit under the cap come April.

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Mars

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05/12/2021 8:55 am

@kev-m, I have the same concern. I think gas will probably drop in price by late spring, but I can’t see electricity dropping below 20p/kWh next year which is going to have a significant effect on heat pumps and running costs.

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Jeff

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06/12/2021 9:38 am

There isn't that long now before the price cap is released.

Although the cap changes in April, the cap is currently due to be published around the 5th Feb based on previous years so only a couple of months time.

So many variables

1. What comes out of the current OFGEM consultation

2. Price of gas both very short and medium term

3. Price of electricity, both wholesale and the balancing mechanism prices where there are increasing issues (there is a separate review on this)

4. Potential £85 pound levy on customer bills to cover failed suppliers. I am not clear how this will work. Could this be a levy on every bill payer, including those on a fixed tariff?

Etc.

Take out some days for the holiday period and that decisions will be need to be drafted before the 5th Feb, OFGEM will have to make some pretty rough assumptions when working out the cap. I expect there will be quite a bit of political input from government as well.

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Mars

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26/12/2021 10:52 am

I’m amending my price cap guess to 30p.

This was published in the Evening Standard yesterday:

Since 2019, energy suppliers in the UK have been subject to a price cap put in place by Ofgem, limiting the amount they can charge customers. With the rising prices, many say they were paying more for gas than they could charge.

The cap is moved twice a year based on the price of energy and is due to next be changed in April.

The regulator is already consulting on a series of proposals which would mean the biggest overhaul of the price cap since it was launched if implemented next year.

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prjohn

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26/12/2021 11:48 am

An intresting article from the Guardian. https://www.theguardian.com/business/2021/dec/23/energy-bills-could-rise-by-50-amid-national-crisis-of-soaring-uk-prices

👍

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Mars

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26/12/2021 1:30 pm

@prjohn, it's scary. Just this week from Christmas to New Year, homeowners in the UK will pay £100m more for energy than they did last year. It's crazy that this situation has been able to develop in the manner that it has.

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MattEngineer

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Topic starter 26/12/2021 9:27 pm

@editor

It’s an imperfect storm, low renewables production and therefore significantly higher dependence on gas for electricity production. Over the last week there have been times when over 50% of our electricity has been produced by gas with a co2 per kwh in excess of 300 grams.

The forward wholesale cost of gas means it’s highly likely it will get more expensive when the cap is reviewed. We’ve gone from 2.56p per Kwh to 4.15p Kwh since our supplier Avro went bust.

I genuinely wanted to fit an air source heat pump as part of bi-valent system but solar combined with battery storage now starts to makes much more sense. I’ve moved to Octopus Go and fixed for 12 months 5p between 00:30 and 4:30 and 25.08p the rest of the time, seemed a sensible option.

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