Ofgem announces news of latest quarterly price cap update for UK energy consumers!

New package of measures to help families save on energy bills as prices fall to lowest level for two years

Ofgem announces news of latest quarterly price cap update for UK energy consumers!

Ofgem has today (Monday 27 February 2023) announced that the energy price cap will be significantly reduced for the period 1 April – 30 June 2023.

The energy price cap, which has been set by the government since January 2019, will be set at an annual level of £3,280 for a dual fuel household paying by direct debit based on typical consumption.

This is a reduction of almost £1,000 from the current level, of £4,279, reflecting falls in wholesale energy prices.

The government has also set the Energy Price Guarantee (EPG) at £3,000 for the typical bill- meaning customers will not pay the full level of the energy price cap. This reduction in the price cap level reflects a significant decrease in the cost of buying and providing energy for customers.

If current trends continue, this could mean that by the summer, prices paid by consumers will drop for the first time since the global gas crisis occurred more than 18 months ago. The energy price cap ensures that customers do not pay a higher amount for their energy than they should, and Ofgem is required to regularly review the level at which it is set.

Ofgem CEO 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.”

“However, today’s announcement reflects the fundamental shift in the cost of wholesale energy for the first time since the gas crisis began, and while it won’t make an immediate difference to consumers, it’s a sign that some of the immense pressure we’ve seen in the energy markets over the last 18 months may be starting to ease. If the reduction in wholesale prices we’re currently seeing continues, the signs are positive that the price cap will fall again in the summer, potentially bringing bills significantly lower.”

“However, prices are unlikely to fall back to the level we saw before the energy crisis. Even with the extensive package of government support that is currently in place, this is a very tough time for many households across Britain.”

“Where people are struggling, we urge them to contact their supplier to make sure they are getting all the help and support they are entitled to. We also think that, with bills continuing to be so high, there is a case for examining with urgency the feasibility of a social tariff for customers in the most vulnerable situations.”

The Chancellor has announced that additional support for bill-payers will continue to be provided through the Energy Price Cap until the end of March 2024. This is great news for those struggling to manage their energy bills, as they will receive much needed support and protection.

Ofgem also has robust rules in place to help people in vulnerable situations, such as offering payment plans and providing advice on available support. Suppliers are also obliged to direct customers to any available help. The news of the extension of the Energy Price Cap is a welcome relief for those who are struggling to keep up with their energy bills.

Ofgem is also continuing to protect consumers through its ongoing regulation of the market, taking enforcement action where necessary, and providing support to those who need it the most. No further action is required from consumers at this stage, however, those who are struggling should take advantage of the additional support available.

The next quarterly price cap update will be on 26 May 2023.

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