Energy bills to leap by £1,200 when cap ends
HOUSEHOLD energy bills will soar by more than £1,200 once the Government’s limit on power prices expires in April, says energy expert Cornwall Insight.
The Government’s energy price guarantee scheme caps the cost per unit of energy used – and for the average household, it means that their annual bill should be capped at £2,500 until March. The EPG was originally supposed to last two years but was cut back by Chancellor Jeremy Hunt.
According to Cornwall, the annual price cap for default tariffs is likely to be £3,702.23 in the second quarter – April to June – down from its earlier estimate of £4,347.69 last month. For July to September, it will fall again to £3,157.67.
Cornwall principal consultant Craig Lowrey said given how much higher Ofgem’s default tariff price cap is expected to be than the EPG, Government will face calls to intervene and protect consumers before it expires.
He said: “The cap forecasts remain well above the annual sum of £2,500 per household under the EPG.With the enduring nature of support for household energy bills up for review in early 2023, the potential for volatility in energy bills will need to be addressed as part of any ongoing measures established.” Since August, wholesale energy market prices have dropped by around a quarter.
But, due to the way the price cap has been structured by regulator Ofgem, Mr Lowrey said companies were not able to take advantage of drops in wholesale prices as quickly as they would have liked. He explained that as energy companies are “encouraged” by the regulator to secure all the power their customers are likely to use in advance, most will have missed the chance to secure first-quarter supplies at a lower cost.
Without the Government’s EPG, Cornwall estimates that households would have faced average energy bills of £4,255.29 at the start of the year.