Energy prices will rise in the autumn to their highest since July 2023. despite recent attempts by the UK government to relieve the pressure on household bills.
Under regulator Ofgem’s new definition of a typical dual-fuel consumer, introduced in July, the annual cap is expected to rise in October to £1,729, from the current £1,663.
This would be the equivalent of £1,941 per year based on its previous calculations, up from the current cap of £1,862.
Under the previous definition the annual cap will rise to £1,941, from the current £1,862. The change uses new average consumption levels.
The cap is expected to leap again from 1 January to £1,885 and edge down on 1 April to £1,810.
Forecasting group Cornwall Insight says the latest increase is being driven by ongoing uncertainty over the US-Iran conflict, with wholesale prices for the coming winter having risen to their highest level in almost four years.
The Middle East situation, and its impact on global gas markets, is affecting the ability of European gas storage operators to refill stocks ahead of winter, with gas-in-store levels remaining at historic low levels for the time of year.
This upward pressure is being compounded by the ongoing heatwave across Europe increasing gas demand for power generation to meeting air conditioning and cooling demand, as well as extended Norwegian offshore production outages and strong LNG cargo demand from Asia.
The increase comes despite the decision announced in July by the new Prime Minister Andy Burnham that VAT would be removed from household electricity bills from October, with the wholesale market swings outweighing the VAT savings.
The cap places a maximum amount consumers pay per unit of energy used, and the daily standing charge that covers the distribution cost of getting gas and electricity to their home. It doesn’t cap thetotal bill – the more energy used, the more it costs.
From 1 July, the energy regulator updated its definition of a ‘typical’ household by reducing the average annual energy consumption it uses in its calculations.
Under the previous measure the cap was £1,862. Using these new average consumption levels (2,500 kWh of electricity and 9,500 kWh of gas), the equivalent annual cost is £1,663.
Prudential
Prudential will release its first-half numbers in the shadow of a shift in the regulatory backdrop in China which is raising concerns about the company’s prospects in that part of the world, say AJ Bell analysts.
Reported tighter restrictions and heavier taxation on offshore insurance policies have created fear that the attractions of Hong Kong insurance products for wealthy customers on the Chinese mainland will be reduced.
This is allied to concerns it could indicate a direction of travel towards stricter scrutiny and regulation of offshore investment flows across the board.
The company will still be expected to put up double-digit profit growth thanks to its exposure to less mature markets, where take-up of insurance and other types of financial products is lower than in the West. This is a key factor behind its pivot east over the last decade or more.
As well as addressing China-related concerns, management will be scrutinised on their ability to protect margins and deliver continuing expansion in sales.
DIARY
Tuesday 25 August
- First-half results from Chesnara and Gulf Keystone Petroleum
Wednesday 26 August
- Ofgem announces price cap
Thursday 27 August
- First-half results from Macfarlane, Prudential
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