Ofgem is expected to announce on Monday that it will drop its cap on the amount energy suppliers are able to charge by around £1,000 – but analysts believe bills will still rise by an average of £500.
The energy regulator is expected to announce that it will drop its cap on the amount energy suppliers are able to charge by around £1,000 to £3,295, effective from April 1, according to the latest forecast from energy consultancy Cornwall Insight. The energy price cap sets a maximum price that energy suppliers can charge consumers for each kilowatt hour (kWh) of energy they use. How much individual households pay depends on how much energy they use.
However, customers will pay about 20% more on their bills – approximately £500 – as the Government’s additional support in the form of the Energy Price Guarantee (EPG) only partially protects consumers from paying the full price cap. The EPG limits the amount that domestic customers pay to 34p per kilowatt hour (kWh) for electricity and 10.3p per kWh for gas – which works out at £2,500 per year for the average household – with the Government picking up the difference between Ofgem’s price cap and the EPG.
