The UK’s energy regulator confirmed that its quarterly cap on household bills for average dual-fuel direct-debit customers would drop earlier this year. Energy bills are still expected to rise for households with the removal of the Government’s grant support despite the recent development from Ofgem.
The cap on energy bills has fallen by around 23 percent for the three months from April 1, from £4,279 for the January to March quarter to £3,280.
This is a reduction of nearly £1,000 from the previous quarter and reflects changes in the wholesale energy market.
Through the energy price cap, Ofgem can limit how much suppliers can charge households for gas and electricity.
Due to external pressure on the wholesale energy market over the past year, the price cap has skyrocketed exponentially.
However, the Government’s energy price guarantee has capped the average yearly household energy bill at £2,500.
With the implementation of this support initiative, energy bills only rose by 27 percent instead of the much higher forecast.
It should be noted that the price guarantee does cap the entirety of a household’s energy bill, but only bills of average usage.
Recently, Chancellor Jeremy Hunt confirmed that the energy price guarantee would remain at its current level of £2,500.
Originally, the cap was supposed to be raised to £3,000 which would have been a £500 hike to a household’s energy bills.
Despite the extension of this support, Britons are losing much-needed assistance with the Government’s £400 energy bill grant coming to an end.
Between October 2022 and March 2023, around £67 in financial assistance was automatically added to peoples’ energy bills.
This helped significantly reduced the amount of money people were paying towards their gas and electricity costs throughout the cost of living crisis.
Dr Steve Buckley, head of Data Science at Loop, outlined that removal of this grant will hurt families even with the energy price guarantee remaining at £2,500 and Ofgem’s price cap dropping.
He explained: “On a monthly basis this will mean households are losing out on £67 regular support payments.
“With Ofgem reducing the energy price cap earlier this month, it is now actually cheaper for the government to support households, with a smaller amount to subsidise.
“Even if the energy price guarantee rise is scrapped, households will still face a significant scale back on Government support to manage costs, as winter discounts come to an end in the midst of a cold snap.
“But, there is other support out there. Don’t wait until you can’t pay to get help – now’s the time to find the alternative support available to you.”
Upon announcing this quarter’s price cap, Ofgem CEO Jonathan Brearley asserted that people should expect to pay more.
Mr Brearly said: “Although wholesale prices have fallen, the price cap has not yet fallen below the planned level of the energy price guarantee.
“This means, that on current policy, bills will rise again in April. I know that for many households this news will be deeply concerning.”
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