Energy bills could rise by £500 despite falling price cap
Energy bills to rise by up to £500. Credit: Getty
Household energy bills could rise by an average of £500, despite Ofgem dropping the price cap by £1000.
Customers will pay about 20 per cent more on their bills because the Government’s Energy Price Guarantee (EPG) only partially protects consumers from paying the full price cap.
Ofgem has announced that the cap – the amount suppliers are able to charge – will fall from the current £4,279 per year to £3,280 for the average household, effective from April 1
Dr Craig Lowrey, principal consultant at energy consultancy Cornwall Insight, said: “While tumbling cap projections are a positive, unfortunately already-stretched households will be seeing little benefit before July."
The EPG limits the amount that domestic customers pay which currently works out at £2,500 per year for the average household – with the Government picking up the difference between Ofgem’s price cap and the EPG.
But this support is set to become less generous from the beginning of April, rising to an average bill of £3,000.
Household energy costs will increase even more when the end of the £400 energy rebate scheme is factored in.
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."