UK Energy Price Cap Forecasted to Decrease by 9% in July
By Susanna Twidale
LONDON (Reuters) -Britain's domestic energy price cap is expected to fall around 9% in July after wholesale energy prices tumbled amid warmer weather and as U.S. tariff announcements stoked fears for economic growth.
A fall in the cap would be welcome news for the government, under pressure to meet a pledge to curb household energy costs.
Benchmark British gas prices have tumbled around 40% since February as warmer weather curbed demand, the EU parliament backed weaker gas storage rules and fears of a global trade war rose that could hamper economic growth and industrial output.
“We have all seen markets go up as fast as they go down, and the very fact the market dropped so quickly shows how vulnerable it is to geopolitical and market shifts,” said Craig Lowrey, Principal Consultant at Cornwall Insight.
British energy regulator Ofgem sets a cap on household energy bills each quarter using a formula that reflects wholesale energy prices and also takes into account suppliers' network costs and environmental and social levies.
Cornwall Insight forecasts Ofgem’s price cap will fall in July to 1,683 pounds ($2,238.89) a year based on average use, from 1,849 pounds a year in April.
Lowrey said high volatility in the market means the cap forecast could change again before being set by Ofgem towards the end of May.
($1 = 0.7517 pounds)
(Reporting By Susanna Twidale; editing by Mark Heinrich)
