UK energy price cap falls to £3,280 from April but bills still on course to rise

theguardian.com:

A price cap on the amount suppliers can charge for energy will fall by £999 to £3,280 from April, but bills will still rise due to a planned cut in government support.

The energy regulator, Ofgem, said on Monday that its quarterly cap on household bills for average dual-fuel direct-debit customers will fall by 23% for the three months from 1 April, from £4,279 for the January to March quarter.

Consumers will not actually pay this figure as the government’s energy price guarantee and its £400 discount scheme subsidise household bills, keeping the price for a typical household at £2,100 a year. But from April the price guarantee will become less generous and the discount will be withdrawn altogether, meaning the typical bill will rise to £3,000.

Chancellor Jeremy Hunt, who is due to deliver the budget on 15 March, faces calls to postpone the planned cut in support, which will lead to some bills rising as much as 40% on last year.

Ofgem’s chief executive, Jonathan Brearley, 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. I know that for many households this news will be deeply concerning.”

The significance of Monday’s announcement is that the Ofgem cap, which limits what suppliers can charge per unit of energy, is used to calculate how much the government will pay energy suppliers to limit typical bills to £3,000.

As long as the level of the price guarantee is lower than the Ofgem price cap, the government will pay suppliers the difference to cover the cost of buying wholesale energy at prices, which have been inflated by the war in Ukraine.

Wholesale gas prices have fallen