Warning for millions as energy bills to rise by £500 in weeks despite price cap falling
MILLIONS of people will see their bills rise by £500 a year in April even though the energy price cap is set to fall.
Today, Ofgem announced that the energy price cap will fall to £3,280 from £4,279 because wholesale prices have dropped.
The energy price cap limits the amount typical households pay for dual fuel bills.
The government stepped in last year to prevent bills rocketing to over £4,000 under the price cap.
Instead the average bill is currently limited to £2,500 under the government's energy price guarantee (EPG), though the exact amount you pay depends on usage.
It means households have paid far less than the price cap this winter.
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But the EPG will still rise by £500 from April 1 to £3,000.
Experts have called on the government to reduce the EPG too, to reflect the falling wholesale prices.
Jonathan Brearley, chief executive at Ofgem said: “Although wholesale prices have fallen, the price cap has not yet fallen below the planned level of the Energy Price Guarantee.
"This means, that on current policy, bills will rise again in April.
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"I know that, for many households this news will be deeply concerning.”
He also said that while today's announcement won't make an immediate difference to consumers, it’s a sign that some of the pressure the energy markets has seen may be starting to ease.
That could see bills fall in future.
The energy boss said: “If the reduction in wholesale prices we’re currently seeing continues, the signs are positive that the price cap will fall again in the summer, potentially bringing bills significantly lower."
But they are "unlikely" to fall back to the levels seen before the energy crisis, he added.
Millions of Brits still face a struggle with bills and Mr Brearley urged people to contact their supplier for help.
He also indicated that social tariffs for the most hard-up households could be an option.
He said: "We also think that, with bills continuing to be so high, there is a case for examining with urgency the feasibility of a social tariff for customers in the most vulnerable situations."
A social tariff is a cheaper option struggling households can move to if they're finding it difficult to meet bill charges and are currently offered by some broadband and mobile firms.
They're usually available to people claiming certain benefits.
What is the energy price cap?
The price cap on energy bills was introduced in January 2019 as a way to ensure that households are not ripped off by their energy suppliers.
Ofgem set the price cap every three months and it's based on the wholesale price of gas.
The price cap was hiked to £3,549 a year in October - but the government stepped in.
To stop bills from spiralling, the then-PM, Liz Truss, replaced the cap with the Energy Price Guarantee, which rolled out from October 1.
It has frozen bills at £2,500 a year on average.
It was supposed to be in place for two years, but after the fallout from the mini-Budget and concerns over rising government debt, Chancellor Jeremy Hunt said the guarantee would only last until April.
After that the EPG will rise to £3,000.
It's worth noting that the EPG is an average bill a household might pay for both gas and electric.
You could pay more if you use more energy - or less than this if you use less energy.
Over 22million households are on default or standard tariffs that are price capped.
What energy bill help is available?
As part of the Autumn Statement, it was revealed millions on benefits and Universal Credit will receive an extra one-off payment of £900.
Struggling families are also eligible for the Warm House Discount to help them tackle the cost of living.
The scheme is where eligible households can get £150 off their electricity bill each winter - but you'll have to wait until the colder months to get the discount.
Households in England and Wales don't need to apply to get the cash and they'll automatically qualify if they are receiving certain benefits.
You can read more about who's eligible in our guide.
There are also plenty of energy grants and schemes open to help you out if you're struggling:
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- British Gas Energy Trust Individuals and Family Fund
- British Gas Energy Trust
- EDF Customer Support Fund
- E.ON and E.ON Next Grants
- Octopus Energy Assist Fund
- OVO Energy
- Scottish Power Hardship Fund
There's also a one-off fuel voucher from your energy supplier if you're on a prepayment meter.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]