Rising energy prices will see government support rise to £5bn a month

UK’s energy regulator, Ofgem, has announced that the price cap will rise to an annual level of £4,279 in January – an all-time high – but households will remain protected for the time being by the 2019 Energy Price Guarantee (EPG). government.

This will see the government spend up to £5bn a month on taxpayer subsidies from January as it is obliged to keep bills for the average household below £2,500, rising to £3,000 in April.

The price cap sets a maximum that suppliers can charge someone per unit of energy with a dual-fuel rate for both gas and electricity prices.

It was a measure introduced under the government of Theresa May, with the aim of preventing excessive looting of electricity companies, especially in times of crisis.

It used to be adjusted semi-annually to reflect movements in the wholesale energy price and prevent energy companies from trading at a loss. Following a series of energy company slumps last year in the wake of rising wholesale costs, Ofgem moved to quarterly cap updates.

Cornwall Insight, an energy research firm, said the increase could cause concern for the government as it will be forced to “overshoot the billions of pounds needed to make up the difference in suppliers”.

While less than 5% of the UK’s imported gas comes from Russia, it is still impacted by rising prices in global markets as demand increases in Europe.

Prior to the attempted invasion of Ukraine, the continent imported about 40% of its natural gas from Russia. After the war, the EU pledged to divest from Russian gas and started looking for alternative trading partners in the US and Morocco.

The next quarterly price cap update will be on 27 February 2023, just over a month before the EPG goes up to £3,000 for households.

In the autumn budget earlier this month, Chancellor Jeremy Hunt also announced cost of living payments of £900 for those on means checks, £300 for pensioners, £150 for those on disability benefits. and doubling of support for those receiving LPG or boiling oil.

Rocio Concha, which one? director of policy and defence, said: “The news that the energy price cap will reach £4,279 from January will be extremely worrying for consumers, but they should remember that their bills are protected against this price increase by the system.” government’s energy price guarantee scheme – which limits the amount households can be charged to around £2,500 for the average household until April.

“Which? is also concerned that hundreds of thousands of customers using traditional pre-pay meters have not yet applied for the government support available.

“Energy companies and Government must work to understand why so many Energy Bill Support Scheme vouchers have still not been redeemed and ensure that customers on these prepay meters – who are more likely to be vulnerable and on lower incomes – are in able to access this life support.”

Sign up for E&T News email to get great stories like this delivered to your inbox every day.

#Rising #energy #prices #government #support #rise #5bn #month

Leave a Reply

Your email address will not be published. Required fields are marked *