Cornwall Insight: Britain to see a 5% increase in energy prices by April

Analysts at Cornwall Insight predicted that Britain's energy price cap would rise by almost 5% this April. Cold weather and low levels of gas storage in Europe are keeping wholesale prices high.

This would be the third consecutive quarter of increases, and would be a major blow to the government, who has set a goal of reducing energy costs.

Craig Lowrey is a principal consultant with Cornwall Insight. He said that the market was more volatile than in recent memory, and households were bearing the brunt due to cold weather, low gas storage, and other factors.

Ed Miliband, Britain's energy minister, wrote a letter on Tuesday to the regulator Ofgem. The letter was also published on X. It urged it to support households that are in debt, and ensure people get compensation for pre-payment meters installed incorrectly.

Ofgem responded by saying that the changes in energy bills were due to the country's dependence on the global gas market. It also said it would introduce tougher standards for customer service and work to launch new tariffs under the price cap, to give consumers more choices.

Ofgem stated in an email that the only way to get rid of this volatility was to create a clean, secure and homegrown system on which homes and businesses could rely.

The benchmark British gas price hit a 2-year high in early February, as the cold temperatures caused a high withdrawal from Britain's and Europe’s gas storages and after the deal to supply Russia with gas via Ukraine expired.

Cornwall Insight predicts that the price cap for a typical year will increase to 2,294.79 pounds in April, from 1,738 pounds in January.

On February 25, Ofgem will announce the April price cap level.

(source: Reuters)