Forecasting Ofgem's energy price cap relies on analysing key factors that influence wholesale energy prices and operational costs of suppliers.
Forecasting Ofgem's energy price cap relies on analysing key factors that influence wholesale energy prices and operational costs of suppliers. The energy price cap is based on the average cost per unit of gas and electricity that suppliers pay, alongside standing charges. Therefore, fluctuations in global energy markets, particularly the cost of natural gas, play a major role in forecasting changes.
Energy analysts, like those from Cornwall Insight, predict future price cap levels by monitoring trends in wholesale energy prices, supply and demand dynamics, geopolitical events, and policy shifts that impact energy markets. For example, colder seasons or energy shortages tend to push prices higher, as seen in recent increases forecasted for 2024-2025.
Additionally, regulatory changes or government intervention can alter the price cap. Analysts also factor in economic indicators like inflation, operational costs, and network charges to provide accurate forecasts. For instance, a 10% rise was widely predicted for October 2024. Energy usage due to weather changes throughout the year varies widely. In the UK this seasonal demand peaks in winter heating demands are highest, significantly impacting energy costs for households.
To forecast the price cap accurately, following real-time data from energy regulators, analysts, and market experts is essential. At ismybillfair, we try to project the strengths of the tariffs we offer using the most up to date information available. Our experts take inputs from our partner suppliers as well as multiple published and approved sources including;
