Families will see their energy prices go up by another £500 a year in April, making the average bill £3,000 per year for gas and electricity.
Thanks to the Energy Price Guarantee (EPG), which caps the tariff that consumers pay per year for their energy, households are currently paying an average of £2,500, considerably lower than the Ofgem price cap of £4,279 a year, with the Government picking up the tab for the difference between the two since October last year.
But from April 1, the EPG is set to rise to £3,000 a year, for the average home, although the EPG caps the tariff you pay, not the monthly amount, so how much you will actually pay depends upon how much energy you use. Ofgem will announce its energy price cap for April to June on February 27, and although boss of Ofgem Jonathan Brearley last month said it was "possible" the price cap could drop to below £3,000 due to a fall in wholesale gas and electricity prices, energy experts at Cornwall Insight have predicted Ofgem's cap will fall to £3,338.07 a year for the average home.
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Falling prices are good news, but as the cap is still predicted to be above the EPG level, most households will continue to pay default standard variable tariffs and will still be protected by the EPG. The £500 rise will come as the current £400 energy bill discount monthly £66/£67 payments end.
However, according to predictions from Cornwall Insight, the July price cap level is forecast to fall to £2,361.96 a year from until the end of September. It will then rise slightly to £2,389.91 a year from October until December. This should mean that by the time the cold weather comes around next winter, households should be back to paying the lower price cap.
The £2,500 EPG was introduced by Liz Truss, and was originally in place for two years. However, when Jeremy Hunt took over as Chancellor he announced its level would rise to £3,000 from April 1 and stay at that level until April 2024.
Even with the lower £2,500 cap in place, people are paying more than twice what they were a year ago for gas and electricity and experts at Cornwall Insight say energy bills will not return to pre-2020 levels of below £1,000 per year for the average household until at least 2030.
This winter, every household received a £400 energy rebate, but although there will be additional help for people on means-tested benefits, disability benefits and the elderly later this year, the Government has ruled out a repeat for winter 2023/24.
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