Cost of living: Energy bills set to increase by 20% later this year despite expected fall in price cap
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According to a Cornwall Insights forecast, energy regulator Ofgem will cap the amount households pay for gas and electricity at £3,294 from April 1, a decrease from the previous cap of £4,279 effective from January to March. However, customers will pay about 20% more on their bills - approximately £500 - as the government’s energy price guarantee only partially protects consumers from paying the full price cap.
The energy price guarantee will limit household energy bills to £3,000 per year from April 1, an increase of £500 from the current rate of £2,500. Factoring in the end of the government’s £400 energy rebate scheme, the energy cost for households will increase even more.
Dr Craig Lowery, Principal Consultant at Cornwall Insight, said: “Regrettably the forecast for April looks set to leave the price cap above the increased energy price guarantee level. While tumbling cap projections are a positive, unfortunately, already stretched households will be seeing little benefit before July.”
The energy rebate scheme saw six payments of around £66 paid back monthly to bill payers from October 2022 to April 2023. As a result of the reduced cap and the high energy price guarantee, Cornwall Insights predicts the amount of government money needed for energy support will fall, saving about £2.6billion.
When will the next Ofgem energy price cap be announced?
The Ofgem energy price cap for April to June will be announced on 27 February
Who is Ofgem?
Ofgem, The Office of Gas and Electricity Markets, is the government regulator for the electricity and downstream natural gas markets in the UK. Ofgem works to protect energy consumers, especially vulnerable people, by ensuring they are treated fairly by their energy provider.