Given CI forecasting a rise in Oct are We looking at Trough Bottom in Short Term Pricing

Scot_39

Ci are forecasting another drop in July, but are forecasting a smaller increase for Q4 - forecasting iirc small c1.6% gas, higher c6.8% electric come Oct vs July.

And as prices went up Oct23 to Jan this year by c5%  fuel rate splits I cannot remember.  Which may or may not be repeated this /next year.

So have we reached or soon to reach at least short term bottom ?

Something that should perhaps influence those looking to fix or wait to do so  vs SVT now or immefiate futue ?

Possible Reasons 

1) Inflation on top of  Old Caps

Given even core let alone CPI inflation levels - it peaked c8% still over c5% etc -  its arguable how much further prices will realistically drop.
Like if take the £1254 pre rises Covid and Ukraine - adding inflation - is only in order of 5% pa cf July CI forecasts.
If take say Apr 2019 at £1254 vs forecast £1463 for July it's under 4% even allowing for lower TDCV. 
Could argue against using that 5 yr but a lower snapshot.

2) Policy and Network Costs - Now vs Historic

These have risen in absolute - and as wholesale recover from Ukraine crisis levels (for now) - also a larger percentage share of new caps.
So take Apr 24 vs Apr 19
In Apr 2019 £1254 cap policy costs were £151, network costs £270.
In Apr 24 £1690 cap - policy costs £188, network costs £368
So "declared as" policy and network have added £135. 
But factor in 2 other arguably policy
- £28 debt offset = adjustment allowance
- £10 ppm levelisation - as DD payers now directly subsidise PPM operating costs
and to some extent
the 0.5% extra on ebit (£8) itself in large part debt policy cost related.

That £135 rises to c£181.

That's a pretty significant shift.


£1254 if drop by c4% for recent c5% TDCV drop = c£1200.
Cf Apr 24 actual cap - arguably thats c£180 of the c£490 difference over 5 years.

The comparible wholsale rise in the 2 Ofgem caps - a near similar £199 and the 2024 figure explicitly ncludes iirc £16 renewables CfD.

If CI forecast correct - July cap c£1463 - so that c£180 (it may reduce pro rata in part where parts charged as %) in c£260 difference - over 5 1/4 years. 
Likely the wholsale diff will be even smaller - the bulk of cap fall in July. 

It's not all the energy producers driving our costs (and associated big bad / profiteering etc accusations).

Ofgem / Govt (as govt arguably controls Ofgem as its an arms length - non minesterial body) social and renewables policy clearly taking a fair toll.