Chancellor confirms Energy Price Guarantee will be extended until June

Chancellor of the Exchequer, Jeremy Hunt, has announced that the Energy Price Guarantee (EPG) will be extended for an additional three months.

The Energy Price Guarantee, which is protecting households by capping typical energy bills at £2,500, will be maintained at the same level for a further three months over April, May, and June, worth £160 in total for a typical household.

The Chancellor is announcing the extension today (15 March) as part of his Spring Budget, which focuses on easing the impact of rising prices, delivering on our promise to halve inflation, and growing the economy by supporting more people into work.

The Chancellor’s three-month extension of the Energy Price Guarantee at £2,500 means households won’t feel the full force of Ofgem’s Price Cap between April and June – which stands at £3,280 – helping to bridge consumers into the summer.

Lower wholesale gas prices are expected to feed through to lower household energy bills from July, where Cornwall Insight data suggests the Ofgem Price Cap will reach an estimated £2,100 a year for a typical household.

Chancellor Jeremy Hunt said:

“High energy bills are one of the biggest worries for families, which is why we’re maintaining the Energy Price Guarantee at its current level. With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.”

Energy Secretary, Grant Shapps said:

“Putin’s illegal war has cost British families, which is why we’ve stepped in to pay around half of the typical household energy bill.

With wholesale prices falling families will start to benefit, but in the meantime we’re stepping back in with the Energy Price Guarantee to prevent the typical electricity and gas bill exceeding £2,500. It’s just part of our plan to help families this winter.”

Richard Neudegg, director of regulation at Uswitch.com, comments: “Consumers will be relieved that the Government has acted on the pressure to postpone the planned increase to the Energy Price Guarantee.

“While energy costs are still historically high, wholesale prices are thankfully now turning a corner and we’re getting close to the point when consumers can not just benefit from the status quo, but actually see lower costs on their bill.

“The Energy Price Guarantee may only be relevant for another three months. If wholesale prices continue to drop, the next price cap in July could be cheaper, meaning we’ll go back to Ofgem dictating default tariff prices every quarter.

“The focus now should be on bringing back both price certainty and choice for consumers before they have to get on the price cap rollercoaster again.

“We see no reason why suppliers can’t take advantage of the lower wholesale prices and start offering fixed deals that are below the Energy Price Guarantee.

“Seven in ten households say that customers should have the option of a fixed tariff available, with three in five willing to sign up to a fixed deal right now.

“In the meantime, households should keep a close eye on energy market updates, while continuing to monitor home energy usage in order to keep bills as low as possible.

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“This welcome step will protect millions of people from unaffordable energy bills.

“Unfortunately it’s not all good news. The withdrawal of the Energy Bill Support Scheme will still mean the average monthly bill rises by £67 from April.

“With millions already unable to afford their bills and energy prices set to remain high in the years ahead, the government must now look at long-term solutions to this problem. Many people, especially those on low incomes, will need ongoing support not only to pay their bills but to make their homes safer and warmer through improved energy efficiency.”

Main photograph: Zara Farrar / HM Treasury