Energy consultancy Cornwall Insight predicts that the next energy price cap will fall compared to the current period.
The Default Tariff Cap has been set by the UK energy regulator Ofgem as the maximum unit rate and standing charge that customers can be charged for their energy consumption. The latest forecast from Cornwall Insight predicts the limit will fall to £1,733 per year for a typical dual-fuel household by the first quarter of 2026.
This is a decrease of £22, or 1%, from the current cap, which is set at £1,755 per year for the fourth quarter of 2025. Despite this drop, the new year’s price cap is still expected to be higher than the price cap set in the third quarter of 2025, which was at £1,720, before rising by 2% in the fourth quarter of this year.
Unit costs in January are expected to be 26.15 pence/kWh for electricity and 5.93 pence/kWh for gas; the standing charge is expected to be 53p/day for electricity and 33p/day for gas.
The consultancy said the forecast figure is falling “largely due to slightly lower wholesale prices”, which is “likely to be a continued trend” as wholesale prices are expected to fall to less than 40% of the cap and remain below that threshold for the rest of the decade.
However, Cornwall Insight also noted that changes and additions to levies are “starting to creep into the bills” and that the current forecast for the April price cap would be £75 higher than the January period.
It says this is largely due to the higher costs associated with running the UK’s energy networks, particularly the costs of electricity transmission and gas distribution.
The expected price cap includes the expected introduction of the Nuclear Regulated Asset Base (RAB) levy, which would add around £10 to annual bills from January. The consultancy pointed out that the forecast increase in the price ceiling for April will intensify calls for government intervention.
This can be done through adjustments to levies, abolition of VAT, introduction of social rates or direct support to vulnerable households. In fact, Cornwall Insight said that “the upcoming Budget will almost certainly introduce measures to ease the bill,” which it said could potentially lower January’s price cap.
However, principal adviser at Cornwall Insight, Craig Lowrey, said: “The government does not have full control over many of the underlying non-wholesale costs. Much of it is linked to the essential work of maintaining and operating the networks.”
The official price cap will be announced by Ofgem on November 21.
Energy company profit
A report published at the end of October by the Energy Security and Net Zero Select Committee shows that the Britain is facing an unprecedented energy debt crisis. It also noted that British companies pay the highest industrial electricity prices in Europe – four times higher than in the US and Canada.
This is against the backdrop of the huge profits made annually by energy companies operating in Britain. Profit margins in the energy sector average 23%, about three times the national average, and by 2024 The energy company’s profits amounted to around £500 per household.
