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Wales Online
Wales Online
National
Neil Shaw

Energy cap drops by £1,000 but number who can't afford to pay bills will double

Ofgem is lowering its energy price cap from the current £4,279 per year to £3,280 for the average household, effective from April 1, it has announced. Ofgem said the reduction of almost £1,000 reflects recent falls in wholesale energy prices.

The £3,280 figure indicates how much consumers on their energy suppliers’ basic tariff would pay if the Government’s Energy Price Guarantee (EPG) was not in place.

From April 1, the Government has set the EPG at £3,000 for the typical bill – meaning consumers will not pay the full level of the energy price cap.

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

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

“However, today’s announcement reflects the fundamental shift in the cost of wholesale energy for the first time since the gas crisis began, and while it won’t make an immediate difference to consumers, it’s a sign that some of the immense pressure we’ve seen in the energy markets over the last 18 months may be starting to ease.

“If the reduction in wholesale prices we’re currently seeing continues, the signs are positive that the price cap will fall again in the summer, potentially bringing bills significantly lower.

“However, prices are unlikely to fall back to the level we saw before the energy crisis. Even with the extensive package of government support that is currently in place, this is a very tough time for many households across Britain.

“Where people are struggling, we urge them to contact their supplier to make sure they are getting all the help and support they are entitled to. We also think that, with bills continuing to be so high, there is a case for examining with urgency the feasibility of a social tariff for customers in the most vulnerable situations.”

The number of people who cannot afford their energy bills will double, Citizens Advice chief executive Dame Clare Moriarty said.

She told BBC Radio 4’s Today Programme: “For most people, on average, we’re going to see a £900 increase in people’s bills.

“Now we know that that’s going to be unsustainable for very many people. We estimate that the number of people who simply won’t be able to afford their energy bills will double.

“So we’ll go from one in 10 people to one in five people. That is a huge number of people.

“That’s why we’re saying that the Government has to keep the energy price guarantee where it is at the moment – £2,500.”

Dame Clare added: “We believe there are about three million people who would be paying more than 10% of their income on energy who won’t be entitled to any of the targeted support that the Government’s going to make available, so we are talking about literally millions of people who are going to see catastrophic impacts.”

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