Ofgem has reduced the amount energy companies may charge consumers for energy, but bills will still climb in April as government assistance wanes. The move by Ofgem does not immediately impact what customers will pay for gas and electricity, but it does lower the government's expenses. In April, the usual annual household bill will increase to £3,000.
Campaigners argue that the increase should be halted because Ofgem's new cap cuts the cost of support. In April, the usual yearly household cost will increase from £2,100 to £3,000. This is due to the Energy Price Guarantee (EPG) becoming less generous and the end of a £400 winter discount on all bills. Now, the government compensates energy suppliers for the gap between the guarantee and the cap imposed by Ofgem.
The energy price cap was £4,279 in January, but due to declining wholesale costs, Ofgem said on Monday that it will reduce to £3,280 in April. TUC general secretary Paul Nowak said: "The cost of energy is out of control. The government must reverse the April increase. With wholesale gas prices falling, ministers have no reason not to intervene."
Emily Fry, economist at the Resolution Foundation, a think tank that focuses on raising the living standards of persons with low and middle incomes, stated: "Consumers won't face average bills of £3,280 this spring, but many will still suffer a 20 percent increase as government support is reduced."
Although the strategy was under review, Chancellor Jeremy Hunt had told the BBC that the government lacked the "capacity to launch a significant new initiative to support people" Ministers also note that broader support, such as the April increase in benefit payments, will assist individuals.
How much will you pay
A home consuming a normal quantity of gas and electricity in England, Wales, and Scotland pays £2,500 annually for energy under the government guarantee.Since January, this annual bill would have been £4,279 without government assistance.
The chancellor has already declared that the EPG will become less generous in April, resulting in an annual cost of £3,000 for the average household.
Without the guarantee, the bill would have been $3,280 from April to July, as estimated by Ofgem. Jonathan Brearley, chief executive officer of Ofgem, stated that April's bill increase was "very worrying" for many people, but that there was optimism for the future.
He stated that the announcement "reflects the first fundamental shift in the cost of wholesale energy since the beginning of the gas crisis, and while it won't have an immediate impact on consumers, it's a sign that some of the enormous pressure we've seen in the energy markets over the past 18 months may be beginning to ease".
Content Source:-https://www.bbc.com/news/business-64748135
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