Jeremy Hunt announced that the Energy Price Guarantee will be extended at its current level for a further three months in an effort to keep energy bills as low as possible.
When first announced by former Prime Minister Liz Truss, the £2,500 Energy Price Guarantee was meant to be in place from 1 October 2022 until April 2024. But when Jeremy Hunt took over from Kwasi Kwarteng as Chancellor, he said that the price guarantee would only be at that level until the end of March 2023. He said that while the price guarantee would remain in effect, it would be increased to £3,000 from April 2023.
According to Gov.uk (opens in new tab), the Energy Price Guarantee will now be kept at £2,500 for an additional three months from April to June, saving a typical household £160.
Hunt will be announcing the extension today, the 15th March, as part of his Spring Budget.
According to The Times (opens in new tab), the chancellor’s decision to extend the guarantee for an additional three months is rooted in waiting until wholesale prices have fallen.
Without the guarantee, average household bills under the current energy price cap would have been approximately £4,279 a year. However, the energy price cap will fall to £3,280 from April 2023 once wholesale energy prices fall, according to Ofgem (opens in new tab).
Predictions from analysts at Cornwall Insight also suggest that the energy price cap may fall even further as we get towards the simmer. As it’s forecast to fall below the current level of the Energy Price Guarantee by July 2023, there has been growing pressure on the government to cancel the planned hike.
‘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,’ explains Jeremy Hunt. ‘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.’
The three-month extension of the Energy Price Guarantee means households won’t feel the full force of Ofgem’s price cap of £3,280 between April and June.
While households will continue to be protected under the price guarantee, the £400 energy support scheme is coming to an end this month (March 2023), and there are no plans to extend the scheme further.
Money Editor on Ideal Home and our sister website Goodto.com, Sarah Handley says: “Scrapping the planned hike in the Energy Price Guarantee will be welcome news to households across the country who have been struggling to make ends meet. But we’re still paying more than ever before for the energy we use, and with the end of the Energy Support Scheme, households will no longer see a £66 or £67 reduction on their energy bills. That means that until prices fall further, it’s still crucial to try to reduce how much energy you use to keep bills as low as possible.”
Additionally, more support is coming online with eight million low income and vulnerable households set to receive at least £900 in cash payments over the next year, alongside a 10% increase in benefits and pensions. The National Living Wage will also increase to £10.42 an hour.
Hunt’s Spring Budget also plans to provide help with childcare costs for parents on Universal Credit, ending the energy premium paid by households who are on prepayment meters. This will save four million families £45 a year from July.
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