The announcement will not affect what households are paying for each unit of gas and electricity.
Here’s a range of responses from the energy industry.
Bills will fall later this year
Energy UK’s Chief Executive Emma Pinchbeck said: “Falling wholesale costs means the Energy Price Guarantee (EPG) has cost the government a lot less than had been anticipated so we, alongside many charities and consumer groups, are urging them to use this surplus to hold the EPG at £2,500 – and to announce that quickly so it can be incorporated in customer bills in time for April.
“That the Ofgem cap has decreased so much does give some cause for optimism that if the pattern continues, bills will fall later this year and we will begin to see cheaper, fixed deals back in a functioning, competitive market.”
Old energy system and onshore wind
Jess Ralston, Energy Analyst at the Energy and Climate Intelligence Unit, said: “The old energy system where gas dictates the price of both heating and electricity has left households paying much higher bills because of volatile international gas prices.
“The ban on cheap onshore wind and low government ambition on improving uninsulated homes has left a higher burden for bill and taxpayers alike.”
A catastrophe for millions of households
Responding to the latest Ofgem quarterly price cap update, Dame Clare Moriarty, Chief Executive of Citizens Advice, said: “Without further support from the government, this April will spell catastrophe for millions of households.
“Unless the government changes course on planned reductions to the level of support for households under the EPG, 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.”
A very steep cliff edge
Greenpeace UK’s Climate Campaigner Georgia Whitaker said: “Millions of cash-strapped households are facing a very steep cliff edge after being dealt a devastating double blow of yet another bill price hike just as financial support is stripped away.
“But it is the government’s abject failure to deliver a proper plan, a programme or funding to insulate homes and decarbonise heating that will push them all over the edge.
“Ministers seem to have abandoned all plans to tackle fuel poverty along with the millions plunged into it. But the solutions to the cost of living and energy crisis are the same as those needed to tackle the climate crisis.
“Struggling households will be left in freefall unless the government delivers a properly funded green homes scheme that reduces energy usage and keeps bills down for good.”
Financial burden is causing misery
The Centre for Ageing Better is calling on the Chancellor to ensure households benefit from the cut and not raise the EPG this spring.
Holly Holder, Deputy Director for Homes at the Centre for Ageing Better, said: “Thousands of society’s most vulnerable will have died this winter because their homes are too cold. The terrible death of 87-year-old Barbara Bolton, and many like her whose stories have not been told, should serve as a huge wake-up call for meaningful change.
“Almost half of all adults are finding it difficult paying their bills, the financial burden is causing misery and mental strain while seven-in-ten older people are being forced to reduce their energy use.”
Energy remains “incredibly unaffordable”
Reacting to the news that Ofgem will cap the amount that suppliers can charge for energy at £3,280, Connor Schwartz, Warm Homes Campaigner at Friends of the Earth, said: “Through the new Ofgem price cap won’t have an immediate impact on people’s bills, it’s a stark reminder that energy remains incredibly unaffordable and that we are still at the whim of volatile global gas markets.”