£1,000 drop in household energy price cap

This is a decrease of just over £1,000 on the current cap of £4,279. 

Consumers will not be directly impacted by the cap – which is set to be announced next Monday (27 February) – due to the Energy Price Guarantee (EPG), which from April will limit a typical household’s energy to £3,000 a year – a rise from the current rate of £2,500.  

The increase in the EPG – according to the forecaster – will save the government £2.6bn across the entire scheme, with the estimated cost going from £29.4bn to £26.8bn.  

Cornwall Insight also allowed its predictions for the following two price caps – for July and October – forecasting that it’ll be lower than the EPG, meaning the government will effectively incur no cost from the scheme during this period. 

Dr Craig Lowrey, principal consultant for the forecaster, said: “Regrettably the forecast for April looks set to leave the price cap above the increased EPG level, meaning average annual consumer bills will effectively jump by 20% (£500).  

“However, this is before we take into account the end of the £400 energy rebate scheme in March, meaning that the cost of energy for households will increase by even more. While tumbling cap projections are a positive, unfortunately, already stretched households will be seeing little benefit before July. 

“In the latter half of the year, we see a notable shift in our predictions, as the cap falls below the government support price for the first time since the introduction of the EPG in October. This gives us optimism as far as the wider energy debate is concerned.  

“While prices under the cap remain considerably higher than historic norms, the combination of falling wholesale prices and an increase in the EPG could see the return of competitive tariffs, and with it the chance for consumers to take back some control over their energy bills. 

“Of course, all of these outcomes remain subject to wholesale energy market volatility – the potential for which cannot be discounted while the current energy crisis is still ongoing. As demonstrated by events over the past year, international incidents can significantly impact energy prices, and our dependence on foreign energy imports leaves us more susceptible to global changes.  

“What we can say is current indications show the outlook for energy bills improving, which in itself is a positive sign.”