Price increase forecast for October 2022

shedboy52

I see Martin has spoken about a 42-46% increase in the cap. Has anybody got a forecast for the gas increase?

The overall cap increase in April was 54% but my gas variable tariff went up just over 80%.

I can fix with EDF but the increase in gas unit prices is 51%.

markin

https://forums.moneysavingexpert.com/discussion/6307877/what-should-the-unit-prices-be-to-cover-wholesale-prices/p28

wrf12345

An impenetrable link that reveals nothing useful and therefore ideal from an industry viewpoint. Reality is that the industry is moving to cartel style pricing, propped up by government infusion of cash (£400 in oct) to stop total outrage from consumers and also effectively making it not worth new entrants coming along and offering a real relationship to wholesale prices. This is a failed industry whose only interest is sustaining itself on the back of ripping off consumers and a government that has no-one who bothers to look into the detail of things so just goes along with what the regulator churns out.

Mstty

That's an interesting viewpoint but wholesale prices and costs to get the energy to the doorstep really don't leave much room for profit for the domestic energy suppliers left.

Have you got any facts and figures to support this @wrf12345 I would be interested to have a read if the position has changed.

pochase

At the moment the predicted gas increase by Cornwall-Insights seems to be 60%.

The margin is a bit to small to advise on taking a 51% fixed tariff.

Problem will be that the nearer we are getting to the real cap being announced the worse the deals will get in relation to the real cap.

Mstty

pochase said:

At the moment the predicted gas increase by Cornwall-Insights seems to be 60%.

The margin is a bit to small to advise on taking a 51% fixed tariff.

Problem will be that the nearer we are getting to the real cap being announced the worse the deals will get in relation to the real cap.

That's scary😳

Is that up from the June 1st statement?

pochase

Yes, based on their 1st of June prediction, which is even a bit higher than the Ofgem letter of £2800 in May.

That one is the only one I have seen where they split the new cap figures into gas and electricity.

But it still is only a prediction of course.

Mstty

pochase said:

Yes, based on their 1st of June prediction, which is even a bit higher than the Ofgem letter of £2800 in May.

That one is the only one I have seen where they split the new cap figures into gas and electricity.

But it still is only a prediction of course.

I thought that was a 46% increase not 60%?

mark_cycling00

There's currently a 15% -20% loss of gas supply (which also generates about 80% of electricity in windless winter days) 
Without reducing demand by 15-20% the price will simply keep rising. JPMorgan predict that there isn't really a price-ceiling on gas prices because heating and electricity in winter is so essential. You can't ship gas around the world in the same way as you can with oil. 

Governments in Europe are competing with each other by pumping more money and more to consumers (or direct to companies such as EDF(france)) which is just fueling demand and price-rises.

Worth remembering that when George Osbourne did his "windfall tax" on north sea oil and gas, most new exploration was cancelled and many existing wells became too expensive to operate so were closed

I would try not to make predictions or form opinions based on "wholesale prices" without fully understanding:
 - futures contracts
 - demand schedules
 - demand variance transactions in advance
 - OTC transactions
 - network balancing charges

pochase

If you deduct the £99.35 standing charge from the £1517.79 new gas cap the Cornwall-Insights predicts you get 1418.44 as the cost for 12000KWh gas (assuming there is no change in the gas standing charge).

So the new capped gas price per KWh would be 11.82p. I am using a current cap price of 7.4p for gas (EDF 7.282p to 7.480p) that is an increase of 4.42p or 59.73%.

Mstty

mark_cycling00 said:

There's currently a 15% -20% loss of gas supply (which also generates about 80% of electricity in windless winter days) 
Without reducing demand by 15-20% the price will simply keep rising. JPMorgan predict that there isn't really a price-ceiling on gas prices because heating and electricity in winter is so essential. You can't ship gas around the world in the same way as you can with oil. 

Governments in Europe are competing with each other by pumping more money and more to consumers (or direct to companies such as EDF(france)) which is just fueling demand and price-rises.

Worth remembering that when George Osbourne did his "windfall tax" on north sea oil and gas, most new exploration was cancelled and many existing wells became too expensive to operate so were closed

I would try not to make predictions or form opinions based on "wholesale prices" without fully understanding:
 - futures contracts
 - demand schedules
 - demand variance transactions in advance
 - OTC transactions
 - network balancing charges

With the expected price hikes released I suspect there could well be a 15-20% reduction in demand. It will be interesting this winter (if all things remain equal and it's as mild as last winter) as to demand compared with previous years.

If you have a source for the loss of 15-20% that could be handy.