Despite falling gas prices and warmer weather, households will likely have to pay £500 more for energy starting in April.
While a respected analyst firm has predicted that the price cap on bills will fall by around £1,000 on Monday next week, customers will not see a reduction in bills due to the end of a series of Government support measures that have kept household bills below the true level of the price cap, according to Cornwall Insight.
Ofgem’s current price cap is set at £4,279, after rising significantly due to several factors including the war in Ukraine.
Ofgem is expected to announce its new cap on Monday, which Cornwall Insight predicts will be £3,295. However, despite the potential reduction in the cap, the end of the Government’s “Energy Price Guarantee” and other support worth £400 per household means that bills are still likely to increase, even as many households turn off their central heating in the spring.
Campaigners are urging the Government to extend its support schemes to assist households struggling with the cost of living crisis
According to Dr Craig Lowrey, the principal consultant at Cornwall Insight, the forecast for April indicates that the price cap will be above the increased Energy Price Guarantee level, resulting in a 20% increase in average annual consumer bills.
Additionally, the end of the £400 energy rebate scheme in March will cause energy costs for households to increase even further. While falling wholesale gas prices may bring back more competitive energy deals, households are unlikely to see significant benefits until July.
Previously, the price cap was the best deal available due to high prices, but with a combination of falling wholesale prices and an increase in the EPG, consumers may have the opportunity to take back some control over their energy bills. The price cap is based on the usage of an average household and is calculated based on kilowatt hours, with the actual amount paid dependent on usage.
