Why are UK energy bills going up and what help will you get?
The maximum price energy companies can charge consumers will fall from 1 April – but bills are still expected to rise on that date because the government is planning to reduce the financial support it has given to households over the winter.
As things stand, bills will jump from £2,100 a year for a typical household to about £3,000 from April.
Monday’s announcement from the industry regulator Ofgem on the energy price cap is being met with demands from campaigners such as Martin Lewis and several charities for the government to postpone its cut in support for households.
According to Lewis, “the damage to people’s pockets and mental health of another round of energy price rise letters is disproportionate”.
There are a few things going on here. Ofgem operates an energy price cap, which sets an upper limit on bills. It is £4,279 a year for the period 1 January to 31 March. Ofgem said on Monday that the cap for the period 1 April to 30 June would fall to £3,280 a year – a reduction of almost £1,000 from the current level.
However, the cap is largely irrelevant for consumers right now because bill payers are covered by the government’s energy price guarantee scheme, which currently limits average annual costs to £2,500. It has effectively replaced the Ofgem price cap as far as consumers are concerned, and means consumers will not pay the full level of today’s figure.
Bills are further reduced by the £400 energy bills support scheme (EBSS), which means a typical household currently pays the equivalent of £2,100 a year. But …
In a few weeks’ time the guarantee scheme will become less generous. That’s because that £2,500 ceiling is being upped to £3,000 a year from 1 April. In other words, a 20% increase.
And this coincides with the
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