Energy price cap

Energy prices are expected to rise by about 20% from April when the government increases its existing limit on bills.

And even if the government does extend its energy price guarantee beyond April, which it should, it’s only a sticking-plaster solution that fails to address the root causes of the energy crisis. “The government must not delay any further in rolling out a street-by-street insulation programme. “Though the new Ofgem price cap won’t have an immediate impact on people’s bills, it’s a stark reminder that energy remains incredibly unaffordable and that we are still at the whim of volatile global gas markets.

Energy regulator Ofgem has announced its quarterly update to the energy price cap for the period 1 April – 30 June 2023.

The fixed horizontal lines show the average wholesale cost allowance for each 6 month price cap period based on the price of the relevant forward looking energy contracts (the jagged line). From 1 April the equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 51p per kWh for electricity customers and a standing charge of 53p per day. The equivalent per unit level for a typical gas customer is 13p per kWh with a standing charge of 29p per day. The £3,280 per year level of the cap is based on a household with typical consumption on a dual fuel electricity and gas bill paying by direct debit . This reduction in the price cap level reflects a significant reduction in the cost of buying and providing energy for customers. The additional costs reflect the higher cost for energy companies to serve them. For an individual customer, the amount they will pay varies depending on how much energy they use, where they live, and how they pay for their energy. The level of this support is set by Government. We also think that, with bills continuing to be so high, there is a case for examining with urgency the feasibility of a social tariff for customers in the most vulnerable situations.” The energy price cap was introduced by the government and has been in place since January 2019, and Ofgem is required to regularly review the level at which it is set. Even with the extensive package of government support that is currently in place, this is a very tough time for many households across Britain.” If the reduction in wholesale prices we’re currently seeing continues, the signs are positive that the price cap will fall again in the summer, potentially bringing bills significantly lower.”

The regulator's new cap shows the cost of government help will be less than initially thought.

The SNP has also called for bills to be cut, seeking a "minimum" £500 cut to the level of the energy price guarantee. You can also get in touch in the following ways: "I'd like to see the scheme continue. The government says the "savings" would be money not borrowed, rather than a pot of money available to spend elsewhere. A lot of the time working families are getting overlooked. This difference will be cut to about £200 from April. It limits the cost per unit of energy. The consumer finance expert Martin Lewis described the rise as a "national act of harm". Labour also wants to stop the increase. Lump sum payments have also been available in Northern Ireland, which has a more complex market, including many households using heating oil. Falling wholesale prices mean the potential cost to the government could be billions of pounds less than initially thought but still totalling just under £30bn. "I do not know it will cancel that rise but I am more hopeful than I was after some rune reading," he told BBC Radio 5Live.

Customers are expected to pay around £500 more on their energy bills from April, despite the Ofgem price cap falling by £1000.

The energy price cap sets a maximum price that energy suppliers can charge consumers for each kilowatt hour (kWh) of energy they use. This will be well below the price guarantee, so will feed through to lower bills for customers and reduce the Government’s part of the bill to zero. The predicted fall of the Ofgem price cap to £3,295, and the rise of the energy price guarantee level to £3,000, means the Government will be paying just £295 per household per year from April to June.

Domestic energy bills are still set to rise by an average of £500 a year – despite the reduction – as the Government limits support for…

This out-of-touch Government is clearly preparing to pull the plug on protecting consumers and is totally abdicating any responsibility for dealing with the runaway profiteering of energy companies. This will provide much-needed relief to struggling households currently waiting to see falling wholesale prices trickle down to their bills.” Recent drops in wholesale prices mean they have the headroom to do this. “The Government must keep the EPG at its current level of £2,500. We also think that, with bills continuing to be so high, there is a case for examining with urgency the feasibility of a social tariff for customers in the most vulnerable situations.” Even with the extensive package of government support that is currently in place, this is a very tough time for many households across Britain.