The Cost of Living Crisis
Ahead of today's Spring Budget, the Treasury has confirmed millions of families are set to save £160 on their energy bills as support is extended ...
Jeremy Hunt has revealed plans to CANCEL a planned increase to the Energy Price Guarantee (EPG), which would have taken it from £2,500 up to £3,000 per year on average.
The EPG protects customers from increases in energy costs by limiting the amount suppliers can charge for energy used.
The Chancellor of the Exchequer announced the plans ahead of the Spring Budget today, 15 March, with the move set to save the average household £160 on their energy bills.
The EPG will be extended for all households for another 3 months, spanning from April through June, in welcome news for families.
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'We know people are worried about their bills rising in April'
Talking about the news, Prime Minister Rishi Sunak said:
'We know people are worried about their bills rising in April, so to give people some peace of mind, we’re keeping the energy price guarantee at its current level until the summer when gas prices are expected to fall.
'Continuing to hold down energy bills is part of our plan to help hardworking families with the cost of living and halve inflation this year.'
Chancellor Jeremy Hunt explained: '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.'
'Pressure on energy support'
The Chancellor had previously faced pressure to scrap the EPG increase from charities and campaigners who said an increase would push more people into poverty.
What is the energy price guarantee?
The EPG was introduced by the government on 1 October 2022 to help households with rising energy bills. It limits the amount suppliers can charge per unit of energy.
Bills were predicted to hit around £4,279 this winter but the EPG helped by capping this at £2,500 for the typical household.
The price guarantee was set to rise to £3,000 from 1 April – meaning we'd have to pay more for energy – but in the Spring Budget the £2,500 guarantee was extended until the end of June 2023.
Bills could lower in July
In July bills could lower further as the energy price cap drops. The energy price cap differs from the EPG.
The energy price cap, which is calculated by Ofgem, was brought in in 2019 to set a maximum price suppliers could charge per unit of energy. However, as this price rose, the EPG was brought in to help protect households from rising bills.
Currently, the price cap is higher than the EPG. To help keep bills lower, the EPG pays suppliers the difference between that level and the £2,500 limit.
However, since the price cap changes every 3 months, by July it is expected this will be cheaper than the EPG, which will lead to a drop in bills for families.
What else is expected in the budget?
From energy bills to childcare costs, the Spring Budget is set to impact families in several areas of life.
It comes the same day teachers are walking out across England and Wales in strike action over pay.
We’ve rounded up how the anticipated budget is expected to affect YOU, your family and your household finances. You can read more here.