Energy Price Guarantee extended until June 2023
In good news for UK energy customers, it seems like the planned £500 increase to the government’s Energy Price Guarantee (EPG) will be scrapped. This would mean that the current maximum standard price of household energy bills will stay capped at £2,500 per year (you could still pay more if you use more energy).
There has been a lot of discussion in the news about energy bills recently. Phrases like Energy Price Cap and Energy Price Guarantee have mentioned constantly – but do you understand what these mean for you and your family home?
In this blog, we will explain more about how the Energy Price Guarantee works, what the Energy Price Cap is and why you may end up paying more for your energy this year.
In this section (Energy Price Guarantee to be extended until June 2023):
- What is the Energy Price Cap?
- How does the Energy Price Guarantee work?
- Why has Energy Price Guarantee support been extended?
- How to save on your energy bills
What is the Energy Price Cap?
Before we look at the Energy Price Guarantee, it is a good idea to understand what the Energy Price Cap is. The Energy Price Cap is set by Ofgem (the Office of Gas and Electricity Markets). The cap is intended to keep prices fair and stop any one company charging too much compared to others.
Ofgem has placed a price cap on energy companies. This cap limits the amount UK consumers can be charged for their base energy tariff. This cap applies to the amount you are charged each hour for your energy usage (known as Kilowatt Hours or kWh). It also applies to the amount you are charged for simply being connected to the energy grid (standing charges).
The energy price cap is reviewed every 3 months and has recently changed. The cap was lowered from £4,279 per year to £3,280 which looked like great news for UK residents. However, many people pointed out that the Energy Price Guarantee was having more of an effect on bills currently.
How does the Energy Price Guarantee work?
UK households are benefitting from the government’s Energy Price Guarantee which has capped the unit rate (how much you can be charged per unit of gas and electricity used) for standard energy use. This was capped at £2,500 per but this was set to rise to £3,000 from April.
This would have meant an almost definite increase in bills for households of around £500 on average. Luckily this reduction in the energy bills support scheme has been cancelled for the time being.
The Energy Price Guarantee is a government scheme that like the Energy Price Cap is intended to prevent consumers from paying too much for their energy bills. This support overrides the price cap currently as that threshold is much higher (£3,280 if paying by direct debit).
Will the Energy Price Guarantee be extended?
When it was announced that the Energy Price Guarantee was set to reduce its level of support, a campaign began to convince the government to reconsider the decision.
This campaign was backed by over 85 UK organisations with overwhelming public support. It is expected that when Jeremy Hunt delivers the next government budget (on 15th March), he will announce an extension of the current level of support (the expected £500 cap increase will be scrapped).
How to save on your energy bills
Families across the UK have felt the impact of the cost-of-living crisis in the last year, with prices rising in all areas. Energy bills have been a big worry for many, particularly over the winter.
Below we have a few of our top tips to save on your energy bills:
- If struggling, speak to your energy supplier as additional support might be available
- Make sure not to leave on appliances and electrical items (e.g. washing machine or tumble dryer) when not in use
- Avoid higher heating bills by turning off radiators in rooms you’re not using and take measures to make rooms draught proof (e.g. draught excluders) to keep heat in
- Use a smart meter to track your usage (and reduce it where you can)
- Find out more in our ‘Tips to save during the cost of living crisis’ blog
It can also be helpful to have additional protection in place in case you were to become ill or injured and unable to pay bills as normal. Policies such as income protection or critical illness cover can provide you and your loved ones with needed financial support in this situation.
If you need further advice, you can speak to one of our skilled insurance experts. We can offer FREE, FRIENDLY advice about how to save on your policy and still put in place the protection your family needs.