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Compared with last week's estimates, Cornwall Insight have now warned that there could be a rise of £650 for the average household in the England, Scotland and Wales.
As the cost of living crisis continues, the energy research company tweeted: "We have released new price cap figures following a wholesale price surge and Ofgem revising their cap methodology."
They predict that a 'typical household' will pay the equivalent of £3,582 per year from October with an increase to £4,266 per year from January, for three months to March 2023.
We have released new price cap figures following a wholesale price surge and Ofgem revising their cap methodology.— Cornwall Insight (@CornwallInsight) August 9, 2022
We are predicting a typical household will pay the equivalent of:
- £3,582 p/a from Oct
- £4,266 p/a from Jan
More on our forecasts below:https://t.co/0LpPYbWXj8
In their report, Cornwall Insight explains the reasoning behind the increase: "In its initial proposals from May, the regulator (Ofgem) stated that an element of supplier costs associated with wholesale market hedging would be explicitly included within the cap methodology and would be recoverable over a 12-month period.
"However, in the consultation documents released last week, it was confirmed that these costs would be recoverable over a six-month period – resulting in higher bills than previously forecast for the crucial January cap."
Money saving expert Martin Lewis has had his say on the newly released figures and tweeted: "Tragic news. The latest @CornwallInsight prediction, based on Ofgem's new methodology, is an 81% price cap rise in Oct (taking typical bill to £3,582/yr) and a further 19% in Jan (so £4,266/yr).
"Action & planning is needed now. The zombie govt needs wake up sooner than 5 Sept..."
Tragic news— Martin Lewis (@MartinSLewis) August 9, 2022
The latest @CornwallInsight prediction, based on Ofgem's new methodology, is an 81% price cap rise in Oct (taking typical bill to £3,582/yr) and a further 19% in Jan (so £4,266/yr)
Action & planning is needed now. The zombie govt needs wake up sooner than 5 Sept...
In follow-up tweets he added: "These amounts are unaffordable for millions. The Jan figure equates to 45% of the full new state pension, and a higher proportion of the old one.
"The rise alone on the Jan prediction, from when the help was first announced in May, is roughly £1,400/yr...
"That rise alone swallows up not just £400 help for all homes,but even the £1,200 for the poorest.
"This will leave many destitute. Tax cuts won't help poorest incl many elderly & disabled who've higher usage.
"Cutting green levy'd be just tiny sticking plaster on a gaping wound..."
The government says they won't be able to act on the crisis until a new prime minister is in place, though Lewis said 'an action plan is needed today'.
He wrote: "The leadership debate must not ignore this portentous national cataclysm any more. They can't say they weren't warned.
"The excuse "we need to wait for Ofgem figure" doesn't wash. In May govt asked Ofgem for forward guidance & made plans based on that. It can do the same now...
"An action plan is needed TODAY. They are all in the same party, let's call on them to come together for the good of the nation rather than personal point scoring.
"People's livelihoods, mental wellbeing & in some cases very lives depend on this."