Energy bills could rise by as much as 30% next year if gas and electricity prices continue to soar and more suppliers go bust, according to a new report.
The research firm Cornwall Insight is forecasting that the energy price cap, set at a record £1,277 a year from 1 October, is going to have to be significantly boosted in spring 2022 as the energy crisis continues.
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The firm expects the energy price cap to be put up by about 30%, to about £1,660, by the industry regulator. Ofgem has said that if gas prices rise, or stay at such elevated levels, it will have to push the price cap up when it is reviewed on 1 April.
“With wholesale gas and electricity prices continuing to reach new records, successive supplier exits during September and a new level for the default tariff cap, the Great British energy market remains on the edge for fresh volatility and further consolidation,” said Craig Lowrey, a senior consultant at Cornwall Insight.
Nine suppliers have collapsed in recent weeks after finding themselves unable to maintain price promises in the face of soaring wholesale gas prices. It is predicted that more could follow.
In a separate warning, the founder of the green energy supplier Ecotricity said it “doesn’t make sense” to have a retail price cap but not a wholesale one, and accused the government of “killing energy companies right now”.
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Dale Vince told BBC Radio 4’s Today programme: “It’s illogical to hold prices at one end of the supply chain and not the other end, and the natural consequence is companies going out of business.
“The government currently have closed their eyes and ears to this and said they don’t care, they’re not going to help energy companies but that kind of misses the point because they’re killing energy companies right now.”
Vince said nationalisation of the sector should be considered.