Sharp Warning of Rising Energy Prices as Government Support Withdraws

Experts warn that from April, companies and consumers will once again face a sharp rise in energy prices.

Energy consultancy Cornwall Insight said the cap on Ofgem bills would fall by around £1,000 to £3,295. Separately, a second report from banking group Investec says the “final” forecast for the April-June period is £3,332.

The average electricity bill for UK households will rise to £3,000 a year between April and June under the UK Energy Price Guarantee (EPG), up from £2,500 at present.

The annual gas and electricity bill for the average home is capped at £2,500 under the government guarantee, and there is also an additional £400 rebate. In April, this limit will be raised to £3,000.

Households are facing even bigger gains as the government’s utility scheme, which deducted an additional £400 from every household payment, comes to an end.

With less generous government energy subsidies, consumers pay 20% more on their fuel bills. Ministers say less aid is needed to strike a “balance” between aid and taxpayer restraint.

The amount that energy providers can charge is determined by Ofgem’s price cap and is reviewed every three months. It is currently set at £4,279 a year for the average family.

The expected cut in the marginal price to lower levels means the government will pay less compensation to suppliers in the April-June quarter.

Cornwall Insight expects the price cap to drop to £2,153 in July and reach £2,161 from October.

Investec forecasts the price cap will drop to £2,165 and then to around £2,190 from October to the end of December.

Both have accurate forecast records, although year-end forecasts are subject to a greater degree of uncertainty. The actual figure will be released by Ofgem next Monday.

DR Craig Lowry of Cornwall Insight said: “Unfortunately, the forecast for April is that the price cap will remain above the elevated Energy Price Guarantee (EPG) level, meaning that the average annual consumer bill will actually increase by 20 per cent (£500) . ).

“However, this is before we take into account the end of the £400 energy rebate in March, which means household electricity bills will rise even more.

“While prices below the margins remain well above historical norms, the combination of falling wholesale prices and rising EPG could lead to a return to competitive prices and an opportunity for consumers to regain some control over their accounts,” he said. .

From April 1, companies can charge 70 to 80 percent more energy, especially if their energy prices are not covered. Cornwall Insight says such an increase could be “disastrous” for many small businesses.

The sharp drop in wholesale gas and electricity prices in recent weeks has raised hopes that the worst of the energy crisis is over. Fuel poverty activists say falling prices mean less taxpayer support and more help for consumers during a cost-of-living crisis.

Consumer finance expert Martin Lewis called the April bill hike “a national act of harm.”

Rocio Concha from the consumer group Which? , is called: “The outlook for a £3,295 ceiling on energy prices from April is worrying. Even if consumers are protected by the Energy Price Guarantee, people will still face a surge in energy prices when the electricity bill support scheme expires and the guarantee is raised from the current £2,500 to £3,000 for the average household in April.

“This increase will be especially difficult for prepaid meter customers, who are likely to have lower incomes as they cannot spread those higher costs evenly over the next year.

“In the absence of effective means of targeted support, the best way for the government to support people is to delay raising the guaranteed energy price to £3,000. For some families still burdened by high inflation, this will be a lifeline to avoid financial hardship.”