Budget: Hunt confirms energy price cap guarantee extension with household bills kept to £2,500
Chancellor Jeremy Hunt has confirmed that the Energy Price Guarantee will be extended at its current level, easing pressure on millions of vulnerable energy users.
The support package, which caps average household bills at £2,500 – will now remain at its current rate from April to June.
It had been due to rise to £3,000 next month, raising concerns Brits would face a potential £900 hike to their energy bills with the £400 discount expiring and the subsidy package tapering off to £3,000.
The Treasury estimates the cost of scrapping the planned 20 per cent increase will amount to around £3bn.
Hunt’s U-turn had been widely trailed in the media over the past week ahead of the Budget, with the government under pressure for charities, energy firms and consumer groups to provide more support for households.
Hunt said: “High energy bills are one of the biggest worries for families, which is why we’re maintaining the energy price guarantee at its current level.
“With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.”
Falling global energy prices mean that the current level will be extended to “bridge the gap” until costs are expected to fall below the cap.
While gas prices have dipped over recent months, this is not expected to be reflected in people’s energy bills until later this year – with suppliers typically hedging supplies over long-term deals.
The price cap is set to fall to £3,280 per year next month, but this is above the rates in the EPG.
Hunt is looking to provide enough support until the cap is projected to fall later in the year – with Cornwall Insight predicting the cap will drop to under £2,300 per year in the autumn.
Prime Minister Rishi Sunak said: “We know people are worried about their bills rising in April, so, to give people some peace of mind, we’re keeping the energy price guarantee at its current level until the summer, when gas prices are expected to fall.
“Continuing to hold down energy bills is part of our plan to help hardworking families with the cost of living and halve inflation this year.”
The decision was welcomed by price comparison service Uswitch, which called on suppliers to begin offering competitive deals for households again now that prices were falling.
Richard Neudegg, director of regulation said: “We see no reason why suppliers can’t take advantage of the lower wholesale prices and start offering fixed deals that are below the Energy Price Guarantee.
“Seven in ten households say that customers should have the option of a fixed tariff available, with three in five willing to sign up to a fixed deal right now.
“In the meantime, households should keep a close eye on energy market updates, while continuing to monitor home energy usage in order to keep bills as low as possible