Chancellor Jeremy Hunt has extended the energy price guarantee (EPG), keeping it at £2,500 for an additional three months from April to June, which will save a typical household £160.
When Rishi Sunak became prime minister in October, Mr Hunt said that he would increase the cap to £3,000 in April 2023 to reduce the burden on public funds. The scheme was introduced last October by former prime minister Liz Truss and limited a typical household energy bill to £2,500 until March. However, on March 15, before Mr Hunt’s spring Budget, the Government announced the scheme would be extended.
This is what we know about the scheme, as of April 2023.
What is the energy support scheme?
The energy price guarantee protects households by capping typical energy bills at £2,500. The short-lived Truss government made the move in response to the general cost of living crisis that the UK has been facing.
“Support has already cut the typical family energy bill by over £1,300 since October, stopping the average household energy bill hitting £4,279 a year this winter,” the government said earlier.
How long has the energy price guarantee been extended?
The government had said the EPG for households would not be continued beyond the spring but in an unexpected U-turn, on March 15, Mr Hunt announced that it would be extended for another three months at its current rate.
New - the Energy Price Guarantee will remain at £2,500 a year for a typical household until the end of June.— HM Treasury (@hmtreasury) March 15, 2023
With energy bills set to fall from July, this change will bridge the gap, easing the pressure on families. pic.twitter.com/QjqEGciM9C
From July, lower wholesale gas prices are expected to feed through to customers, with Cornwall Insight data predicting the Ofgem price cap will reach roughly £2,100 a year for a typical household. So, the hope is that by the summer, the scheme won’t be needed as desperately.
Mr Hunt: “High energy bills are one of the biggest worries for families, which is why we’re maintaining the energy price guarantee at its current level. With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.”
The decision is expected to cost the Government £3 billion.
However, the energy voucher scheme that sent households £66 per month to go towards their bills will still come to an end in April.
Will the energy support scheme return?
The scheme is set to come to an end in June when warmer weather will diminish the need for energy. The government has not said it has plans to reintroduce the energy support scheme for the autumn or winter.
“Lower wholesale gas prices are expected to feed through to lower household energy bills from July, where Cornwall Insight data suggests the Ofgem Price Cap will reach an estimated £2,100 a year for a typical household,” the Government said.