The cap on energy bills might soar by several hundred pounds more than nightmare forecasts predicted earlier this week, new analysis has shown.
In a provisional forecast, experts at energy consultancy Auxilione predicted the price cap on energy bills could reach £3,687 in October – close to double today’s already record levels.
In what is thought to be the worst outlook yet for the 24 million households whose bills are governed by the price cap, the experts also saw further rises in 2023.
The cap could hit around £4,400 in January, they warned, although the predictions came with caveats.
Auxilione said it was double-checking its figures, due to changes made by energy regulator Ofgem to the price cap rules.
“We release today’s view with a caveat that we are having to re-do our analysis this week to ‘double check’ that the outputs are correct. Be sure to be sitting down before reading on,” it said.
The price could balloon further to £4,700 in April, the experts said, although they warned that forecasts so far ahead are more likely to be unreliable.
If true, it would mean a price cap more than four times higher than before the gas price crisis started last year.
Falls will not happen until July, when the price cap might dip to £4,000 – but this is still double current levels.
Auxilione said the changes – which added around £400 to the January price cap compared to Friday’s forecast – were largely due to new Ofgem rules that were announced earlier this week.
“On Thursday Ofgem released their final models including some changes to allowances within the cap, such as recovering some of these over a shorter period of time,” it said.
“Having now analysed these has left us wondering if these are showing the correct outputs.
“Over the last 24 hours we have been comparing our values with other analysts who also seem to be in the same position as us – in disbelief at the values.”
The energy market is changing dramatically and the way we regulate price has to keep pace, so that we don’t see more supplier failures that could add to everyone’s bills.
Read our press release to learn more about our changes to the price cap ⬇️https://t.co/PEJkhYYlLC pic.twitter.com/YnfID8olb8
— Ofgem (@ofgem) August 5, 2022
An Ofgem spokesman said: “The wholesale market continues to move extremely quickly so no forecast for next year is at all robust at this stage and will therefore have very limited value, especially for consumers who must always be the main priority.
“We cannot stop others from making predictions but we would ask that extreme caution is applied to any predictions for the price cap in January or beyond.”
If the provisional forecast is correct, it It will mean serious hardship for many households struggling to keep their homes warm.
Experts recommend many techniques to cut back gas use. One of the simplest is to reduce the flow temperature on a boiler, which could save around £200 on an average energy bill.
The flow temperature is how hot the water going to your radiators is, by lowering it your boiler can operate more efficiently.
It does not change how warm your home becomes, although it might take a little longer to warm up.
The technique only works for homes with a condensing combi boiler. Guides on how to do this can be found online.
Many boilers are also set to a “pre-heat” mode, which constantly keeps a small amount of water hot for when you run the taps.
By turning this off it will take longer for your hot water tap to become warm, but it could again save hundreds of pounds.
There are many other ways to reduce gas use, but most require an up-front investment which can pay off over time.
These include new insulation, servicing your boiler or radiators, swapping single glazing for double glazing and many more.