- Energy price cap to fall by £999 to £3,280
- Households will face higher bills as government’s Energy Price Guarantee to change from £2,500 to £3,000 for average household
- Energy Support Scheme also ends in April so in real terms people will be paying an extra £900 a year
Danni Hewson, AJ Bell head of financial analysis, comments on Ofgem's quarterly price cap update:
“The irony won’t be lost on many that at a time energy prices are finally falling from their uncomfortable peak millions of households across the UK will find themselves paying more. People are still protected to a degree by the government’s energy guarantee, but from April it will be much less generous. To add insult to injury the welcome discount that’s been popping into people’s accounts every month also ends at the same time and taken together there will be plenty of families hoping for a very mild spring.
“To be fair to the government, it has sheltered us from the worst of the volatility, but the three months from April will be brutally hard for millions of people already struggling with double digit inflation which has been battering budgets for months. Charities are calling for the government to rethink its planned increase to the price guarantee which is likely to be rendered obsolete by falling prices by the time the next cap is announced.
“And the expected cost of the scheme has fallen significantly since Jeremey Hunt took over as Chancellor, perhaps creating an opportunity to pull what would be an incredibly well-received rabbit from his budget briefcase next month.
“But the cold, hard truth we are all going to have to get used to is that even if the next price cap does come in as anticipated at just over the £2,000 mark from July, that’s still a thousand pounds higher than where it was before Russia invaded Ukraine.
“Slightly lower prices might bring back competition from suppliers to get us to sign up to fixed deals, but consumers will be wary that continued volatility may lock them into rates that end up higher than the standard tariff.
“It’s a confusing picture and one that will bring more families into fuel poverty. It’s no longer worth telling people to take steps to bring down bills because thermostats are down and the Sunday roast has been replaced by microwaveable meals.
“It’s also hard to welcome today’s price cap as the good news it is because it won’t bring any real benefits to the public. And whilst energy companies are still making big profits, this is a political hot potato that will keep being passed from one set of hands to another.”
