News
Tony Jordan
29 January 2025

Domestic Energy Price Cap Update – 29/01/2025

Just as we have done for some previous price caps, Auxilione today provide an update as to our forecasts now that we are around 80% through the calculation period for the upcoming cap starting 1st April 2025.

Whilst it is always hoped that a downward movement will be seen, sadly once again the upcoming cap period is not going to provide that.

Over the winter months, wholesale energy markets have remained volatile and risen rather aggressively as a mixture of events have pushed price levels for both near-term and future delivery to new highs.

Our latest projection shows that the ‘headline’ rate, the value used by the regulator Ofgem to determine what the ‘typical’ annual bill for a dual-fuel consumer paying by direct debit at average household consumption, will increase from the current level of £1,738 to around £1,815 – representing a 4.5% increase.

The main cause of the increase is due to gas wholesale prices which have risen aggressively during the last few months for future delivery by around 15% whilst electricity wholesale prices have remained on par to those calculated in the previous cap period. This is likely to be reflected in the split of the cap breakdown, with gas incurring around a 9% increase whilst electricity will see marginal change.

Events such as colder temperatures, driving gas storage facilities to deplete more quickly than anticipated meaning a greater refilling requirement in the summer, and geopolitical events around the Ukraine transit deal ending have injected further volatility into the wholesale gas markets.

Whilst there is still 20% of the calculation period remaining, the average levels calculated so far show that it is all but certain for a 4-5% increase against the current cap levels to be expected.

It is far too early to say what the July cap and beyond will look like. Currently wholesale markets are in ‘backwardation’ which means longer-term prices are cheaper than the near-term …. however we have seen markets hold this shape for some time now and cannot therefore be used to expect a sudden drop to be realised.