Price cap falls to £3,280 but bills will rise

Its current level is £4,279

The energy regulator has today announced the price cap is set to fall to an annual level of £3,280 in April.

Announcing its quarterly update to the energy price cap for the period 1st April – 31st June, Ofgem said: “This is a reduction of almost £1,000 from the current level which reflects recent falls in wholesale prices.”

In November, the regulator unveiled a price cap level of £4,279 that came into play in January 2023.

The energy price cap level indicates how much consumers on their supplier’s basic tariff would pay if the government’s Energy Price Guarantee (EPG) was not in place.

Although billpayers will still be protected by the EPG until the end of March 2024, the protection will be reduced resulting in a 20% increase in energy bills.

Ofgem Chief Executive Officer Jonathan Brearley said: “Although wholesale prices have fallen, the price cap has not yet fallen below the planned level of the EPG.

“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 have seen in the energy market over the last 18 months may be starting to ease.

“If the reduction in wholesale prices we are 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.”

A Department for Energy Security and Net Zero spokesperson said: “Government support will continue to help households with their energy bills. We know this is a difficult time for families which is why the government has covered around half of the typical household’s energy bill this winter; and by the end of June the EPG will have saved a typical household in Great Britain around £1,000 since it began in October.

“In the meantime, we’re committed to helping people with rising costs by reducing inflation and growing the economy. The cost of energy has already been falling and we expect this to drop further over the coming months, which we fully expect suppliers to pass onto their customers.”

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