The Energy Price Guarantee (EPG) will be extended, announced chancellor Jeremy Hunt in his Autumn Statement - but the typical average household will still see their energy bill rise to an estimated £3,000 starting April 2023.
The EPG was introduced by Liz Truss and Kwasi Kwarteng to help households with rising energy bills in the September mini-Budget. Under the EPG, the average typical household was expected to pay £2,500 in bills as opposed to the predicted £3,549 a year from 1 October.
This was due to be the case until October 2024, however Hunt reduced this to April 2023 due to the cost it would have to the government. Hunt said looking beyond April, it would be “irresponsible for the government to continue exposing the public finances to unlimited volatility in international gas prices”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Today’s announcement is not a price cap – your bill will depend on how much energy you actually use. The price that energy firms charge per unit of energy will be capped, but it’s still increasing.
What will happen to energy prices after April 2023?
Analysts had predicted bills would rise to £3,700 from April 2023 without government interference. The £3,000 average bill prediction is lower, but it’s still a marked increase from what you pay now.
“The new energy price cap of £3,000 for a typical household is 20% more than people are currently paying, and two and a half times where energy bills were last summer, when the typical energy bill was around £1,200,” says Sarah Pennells, consumer finance specialist at Royal London.
Whether wholesale gas prices will go down remains to be seen, as these have been driven up in part by Russia’s invasion of Ukraine. However, there have been forecasts suggesting energy bills could hit as much as £6,000 a year, based on average typical use, in 2023.
With so much complexity in the markets, it can be difficult to predict which direction gas prices will go.
Will I still get the £400 energy grant?
The £400 energy grant, announced by the former chancellor Rishi Sunak will still be paid to all households on the energy grid. But, this will come to and end in March, meaning the actual hike to your energy bill will be higher.
The first of these payments started in October and will end in March. See our article on who will get the £400 energy grant and how it will be paid.
-
Older savers dangerously unprepared for financial shocks in retirementMost over-50s haven’t factored in the cost of care when planning for retirement, or other financial hurdles like long-term illness. We share four tips to boost your financial resilience.
-
Domino’s Pizza faces £3m hit from the Budget - should you invest?Domino’s Pizza Group has forecast a £3 million tax hit following the Autumn Budget
-
Act now to bag NatWest-owned Ulster Bank's 5.2% easy access savings accountUlster Bank is offering savers the chance to earn 5.2% on their cash savings, but you need to act fast as easy access rates are falling. We have all the details
-
Moneybox raises market-leading cash ISA to 5%Savings and investing app MoneyBox has boosted the rate on its cash ISA again, hiking it from 4.75% to 5% making it one of top rates. We have all the details.
-
October NS&I Premium Bonds winners - check now to see what you wonNS&I Premium Bonds holders can check now to see if they have won a prize this month. We explain how to check your premium bonds
-
Bank of Baroda closes doors to UK retail bankingAfter almost 70 years of operating in the UK, one of India’s largest bank is shutting up shop in the UK retail banking market. We explain everything you need to know if you have savings or a current account with Bank of Baroda
-
How to earn cashback on spendingFrom credit cards and current accounts to cashback websites, there are plenty of ways to earn cashback on the money you spend
-
John Lewis mulls buy now, pay later schemeThe CEO of John Lewis has said the retailer will consider introducing buy now, pay later initiatives for lower-priced items.
-
State pension triple lock at risk as cost balloonsThe cost of the state pension triple lock could be far higher than expected due to record wage growth. Will the government keep the policy in place in 2024?
-
Paragon raises rate on one-year fixed cash ISA to 5.75%Paragon Bank ups its one-year fixed cash ISA rate to 5.75% - is it enough to top the table?
