Energy bills to rise by £500 a year from April

Despite falling gas prices, average cost will hit £3,000 and ‘there is unlikely to be a return to pre-crisis levels’

The average household energy bill is set to rise by £500 per year from April despite a fall in gas prices. Ofgem, the energy regulator, yesterday confirmed that the energy price cap would fall to £3,280 from April, a drop of £999, thanks to falling gas prices. However, bills will climb from £2,500 to £3,000, as households receive less government support. Campaigners are calling on No10 not to lessen its financial assistance, given that falling wholesale prices reduce the cost of doing so.

THE average household energy bill is set to rise by £500 per year from April, despite a stark fall in gas prices.

Ofgem, the energy regulator, yesterday confirmed the energy price cap would fall to £3,280 from April, a drop of £999, thanks to falling gas prices.

However, bills are set to climb from £2,500 per year to £3,000 per year as the Government lowers the amount of support it is offering households.

Campaigners are calling on the Government not to lessen its support to households, given that falling wholesale prices lessen the cost of doing so. Dame Clare Moriarty, chief executive of Citizens Advice, said it estimated that those unable to afford their bills “will double, from one in 10 to one in five”, unless the Government changed course.

The Government stepped in last October to subsidise household energy bills after months of soaring wholesale energy costs, worsened by Russia’s war on Ukraine. It is paying suppliers the difference between the price cap on energy bills, which reflects wholesale costs, and its energy price guarantee.

Ofgem has dropped its price cap on the amount energy suppliers are able to charge to £3,280 from April 1, down from £4,279 at present. The revision reflects a fall in wholesale prices.

Meanwhile, the Government is reducing the support for bill payers under its energy price guarantee.

Household bills will climb by £500 per year, while the amount the Government is paying to subsidise households will fall from £1,779 per year to £280.

The price cap is recalculated every three months and prices are set to change again in July. Analysts expect it to fall to £2,112, meaning household bills should fall and the Government will no longer be subsidising them.

Jonathan Brearley, chief executive of Ofgem, said there were signs that the pressure on energy markets was “starting to ease” but warned a return to precrisis bills was unlikely.

He added: “If the reduction in wholesale prices we’re 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 in place, this is a very tough time for many households across Britain.”

Ed Miliband, Labour’s shadow climate and net zero secretary, accused No10 of failing to implement a “proper windfall tax on oil and gas companies”.

The Government has raised the tax rate on North Sea oil and gas drillers from 40 per cent to 75 per cent, with generous investment allowances.

Mr Miliband said: “Rishi Sunak is too weak to stand up for the British people.”

The Government is exploring plans for a so-called social tariff to protect lower-income households from high energy costs.

Stronger tax receipts, lower energy prices and a brighter economic outlook will hand Jeremy Hunt a £56billion boost in next month’s Budget, according to a leading think tank.

The Institute for Fiscal Studies (IFS) said plunging wholesale gas costs and more “tax-rich” growth, particularly from workers and businesses paying more income and corporation tax, would help the UK to avoid a prolonged recession predicted just a few months ago.

The IFS pre-budget analysis showed public borrowing this financial year was on course to be £31 billion less than forecast by the Office for Budget Responsibility (OBR) in November, and some £25billion lower in 2023-24.

The findings are likely to renew calls for the Chancellor to cut taxes in the March 15 Budget to dampen the effect of a “double whammy” of higher corporation tax, which is set to rise by six percentage points to 25 per cent in April.

A spokesman for the Department for Energy Security and Net Zero said: “By the end of June, the energy price guarantee will have saved a typical household in Great Britain around £1,000 since it began in October.”