Who is eligible for Jeremy Hunt’s extended energy bill support?

The energy price guarantee has been extended for three months, Jeremy Hunt confirmed in his Spring Budget.

The average annual household bill will continue to be capped at £2,500 from April to June.

The cap was first introduced by then-prime minister Liz Truss in September in response to soaring gas and electricity prices.

Announcing the extended support on Wednesday, prime minister Rishi Sunak said the move was part of the government’s plan to support families through the ongoing cost of living crisis.

“We know people are worried about their bills rising in April, so to give people some peace of mind, we're keeping the energy price guarantee at its current level until the summer when gas prices are expected to fall,” Mr Sunak said.

The energy price cap was introduced in January 2019 and is set by regulator Ofgem to determine the amount energy suppliers can charge customers on their standard variable tariffs.

Now set quarterly, Ofgem dictates the price households pay for every unit of gas and electricity they use, based on wholesale prices. It also includes allowances for tax, charges paid to the energy networks, green levies and social payments.

The cap is quoted in the form of the average annual household bill.

In September last year, Ms Truss announced that the typical UK household would pay no more than £2,500 a year for energy for the following two years from October 1 as the Government responded to soaring gas and electricity prices.

Without intervention, the average household energy bill would have jumped 80 per cent from October 1, from £1,971 to £3,549 a year under Ofgem’s price cap at the time.

Mr Hunt will cancel the planned £500 hike in average energy bills, which was due to come into force next month.

The Treasury has come under increasing pressure to cancel the rise, which was set to come into force on 1 April.

The EPG had been due to rise to £3,000, but falling energy prices mean that the current level can be extended to “bridge the gap” until costs fall below the cap, said Mr Hunt.

The energy price cap does not apply to those on a fixed-term energy deal, so some customers will be locked in at higher prices than the current cap.

Similarly, some standard variable green energy tariffs have been exempted from the cap by Ofgem.

But the vast majority of customers are eligible, including those on pre-payment meters.

As the guarantee, like the former price cap, is a limit on unit prices – despite it being quoted in the form of the average bill – customers can pay far more or much less depending on how much they use.

Households are also billed for standing charges, which are set at a daily rate regardless of energy use.

Every household in the UK has been receiving a non-repayable £400 payment from the Government as part of a cost-of-living support package, which Rishi Sunak announced while chancellor.

It was applied directly to households’ energy bills, divided into monthly instalments between October and March. This scheme has not been extended and so ends this month.

However, UK households on means-tested benefits will receive a further £900 Cost of Living Payment, while pensioner households will get an additional £300. People on non-means-tested disability benefits will receive an extra £150 Disability Cost of Living payment.