Ofgem, the energy regulator for Great Britain, has always set a price cap for energy providers. Every three months Ofgem calculates the maximum price providers can charge their customers per kilowatt hour (kWh) of energy used. The final figure you pay for your energy bill is then dependent on how much energy that you use and how you pay for said energy, with payment via direct debit being the most affordable option.
Whilst Ofgem regulates the energy suppliers, this regulation does not extend to the global gas and oil production sector. So, as a result of wholesale gas prices shooting up significantly in the wake of the Russian invasion of Ukraine in February 2022, the government introduced the Energy Price Guarantee to run from 1 October 2022 – 31 March 2022. This provides an additional level of protection for energy customers to ensure that they pay less for the energy they consume than they would have done under the steadily increasing standard price cap.
For households with typical energy usage, this meant average rates were as follows, dependent on meter and payment type. Standing charges for those customers on default tariffs remained in line with the default tariff cap.
| Electricity | Gas |
| £0.34 per/kWh | £0.10 per kWh |
| Daily standing charge: £0.46 | Daily standing charge: £0. 28 |
By reducing the unit cost of gas and electricity, households in Great Britain with typical energy usage on a dual electricity and gas bill paid by direct debit would therefore pay an average of £2,500 annually for their energy bill until 31 March 2023. In Northern Ireland, the figure is around £1,950 per year. In comparison, for 1 January to 31 March 2023, the Ofgem Energy Price Cap level was set at £4,279.
In the winter of 2022, the government also offered a £400 winter fuel supplement (£600 in Northern Ireland) known as the Energy Bills Support Scheme to all households. From November 2022 to March 2023 both households and businesses with smart meters were incentivised to use less peak-time electricity too.
So, what happens after 31 March 2023?
During the Autumn Statement, the Chancellor confirmed the extension of the Energy Price Guarantee from 1 April 2023 – 31 March 2024. However, the average cost increases to around £3,000 a year.
Will there still be extra support available for homeowners from 1 April 2023?
The following assistance will be available as of 1 April 2023:
- Households receiving means-tested benefits will receive a total of £900 split into three separate payments in spring 2023, autumn 2023 and spring 2024.
- Pensioners will receive a £300 supplement towards their energy bills.
- Those receiving particular disability benefits will receive a £150 supplement towards their energy bills.
What about businesses?
Back dated to October 2022, the Energy Bill Relief Scheme is available to businesses, voluntary sector organisations like charities and public sector organisations such as schools, hospitals and care homes in England, Scotland and Wales until March 2023. The scheme offers a discount which brings prices down to 21.1p per kWh for electricity and 7.5p per KWh for gas. There is a similar scheme available in Northern Ireland.
As of 1 April 2023, non-domestic customers will receive a discount on wholesale energy prices rather than the cost cap, and heavy energy users will receive a larger discount.
When will we start to see our energy bills fall?
Whilst wholesale energy prices have already begun to fall, energy providers purchase their supplies in advance, which means a delay in any cost savings being passed on to consumers. Analysts have predicted that we will see an energy price cap of around £2,153 from July 2023 and into the latter half of 2023, which means that the government’s energy price guarantee is likely to become superfluous way before it is due to end in March 2024.
How can I improve my energy efficiency?
Whatever the cost of your energy bills you never want to pay more than you need to. Whilst you should always compare prices from a range of energy suppliers to get the best deal, there are also a number of ways that you can decrease your energy bills by making your home more energy efficient. Improving the insulation in your walls and roof, draught-proofing floors, doors and windows and installing a more efficient boiler will all have a significant effect and there are often loans and grants available for doing so. As an added incentive, increasing your property’s energy efficiency can also add about 14% to its value and – for the more eco-conscious – reduce your carbon footprint.
Head to the energy savings trust website for more information at: energysavingtrust.org.uk/
