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”.
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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.
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