Since October 2022, billpayers across the country have been benefiting from the Energy Price Guarantee.
The government scheme originally capped energy costs at £2,500 for two years from October 2022 to September 2023. However, this was later reduced to nine months, increasing to £3,000 from July 2023.
Despite this increase, billpayers will no longer be required to rely on the Energy Price Guarantee because the Ofgem price cap from July will be lower than the EPG at £2,074 for average use. It's important to note that this price cap will not be a flat rate on what you pay on bills per year, and may vary depending on how much energy you use.
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The lower price cap reflects the trends in wholesale energy prices which have fallen from their peaks in the summer of 2022. Despite this, there is a delay between the wholesale price and the rate at which customers pay - thisis why the significant reduction in the price cap in April 2023 was not steep enough to drive down bills below the EPG level.
What will happen to my energy bills now that the EPG is no longer in place?
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If you took on a fixed rate in the past year when energy bills were dramatically high, you may have seen subsidies on your bill via the EPG. From July 1, that subsidy will be reduced to zero which means you will pay the original price of your fixed rate. Forecasters are currently predicting that household bills will remain high for the coming month
Predictions from Cornwall Insights state: "Despite the cap falling from the sky-high prices of the past two years, the figure remains over £1,000 per year more than the price cap levels seen prior to the pandemic. We do not currently expect bills to return to pre-2020 levels before the end of the decade at the earliest.’
And while some forecasters have praised the price cap drop, others are more weary. Money-saving expert Martin Lewis said billpayers may not actually feel any real benefit from the new prices because the £400 winter energy bill support scheme has come to an end which means people will be paying the same as they were over the winter period.
