Ofgem announce energy price cap as bills set to rise

Ofgem has announced households will pay upto £500 more on energy bills- despite its price cap falling by £1000 from April.

The energy regulator has confirmed it has slashed the price cap on the amount energy suppliers are able to charge to £3,280 from April 1 from £4,279 at present.

But households are still expected to fork out hundreds more because the government increased its own price cap on bills.

Ofgem said the reduction of almost £1,000 reflects recent falls in wholesale energy prices.

The £3,280 figure indicates how much consumers on their energy suppliers’ basic tariff would pay if the government’s Energy Price Guarantee (EPG) was not in place.

From April 1, the government has set the EPG at £3,000 for the typical bill - meaning consumers will not pay the full level of the energy price cap.

Ofgem chief executive Jonathan Brearley 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.

“However, today’s announcement reflects the fundamental shift in the cost of wholesale energy for the first time since the gas crisis began, and while it won’t make an immediate difference to consumers, it’s a sign that some of the immense pressure we’ve seen in the energy markets over the last 18 months may be starting to ease.

“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.

“However, prices are unlikely to fall back to the level we saw before the energy crisis. Even with the extensive package of government support that is currently in place, this is a very tough time for many households across Britain.

“Where people are struggling, we urge them to contact their supplier to make sure they are getting all the help and support they are entitled to. 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.”

Citizens Advice chief executive Dame Clare Moriarty said the increase will “spell catastrophe” for millions of households without further support from the government.

She said: “Unless the government changes course on planned reductions to the level of support for households under the Energy Price Guarantee, we estimate the number of people unable to afford their bills will double from one in 10 to one in five.

“The government must keep the EPG at its current level of £2,500. Recent drops in wholesale prices mean they have the headroom to do this. The alternative is millions more people unable to keep their house warm and keep the lights on.”