Energy bills set to rise in April with new price cap

Cost for households set to rise 20 per cent as government scales back support

Energy bills for British households are set to rise 20 per cent from April 1. PA

Energy regulator Ofgem has set a new price cap, revealing a substantial rise in the amount people will pay for their gas and electricity from April.

Under the government’s Energy Price Guarantee (EPG), a household using an average amount of gas and electricity in England, Wales and Scotland is currently paying £2,500 ($2,995) a year.

That is significantly less than they would have paid since January without the government guarantee, at £4,279 for a typical bill.

But from April 1, the level of support will fall, meaning an average household bill will rise from £2,500 to £3,000, a 20 per cent increase.

"Although wholesale prices have fallen, the price cap has not yet fallen below the planned level of the EPG. This means, that on current policy, bills will rise again in April," said Ofgem chief executive Jonathan Brearley.

"I know that, for many households, this news will be deeply concerning."

Wholesale gas prices soared worldwide after Russia invaded Ukraine a year ago.

But they have since come down substantially, due in part to a relatively mild winter in the UK and elsewhere in Europe.

Ofgem has said without government support, the average annual household energy bill would be £3,280, because of the falling wholesale prices.

The £3,000 cap is expected to continue until the EPG ends in April next year.

But at the end next month, the government is ending another form of support it has offered over the winter — a £400 flat payment to reduce energy bills for every household.

That effectively reduced a household’s bill by £66-£67 a month between October and March.

And because households will not receive this support next winter, the rise in energy prices will feel even bigger.

“Factoring in the £400 bill support everyone will get this winter, it's a typical 43 per cent rise in April,” said moneysavingexpert.com, Martin Lewis’s website.

Mr Lewis has said energy prices are expected to fall below the price cap from July.

“If the energy price cap, which is set by the regulator and dictated by wholesale prices, is lower than the energy price guarantee, we pay the lower amount and that is likely to happen from July,” he said.