Calls for stronger windfall as new energy price cap announced

Energy regulator Ofgem has said bills will rise in April, despite the price cap being reduced by around £1000 to an annual level of £3,280.

This drop in the price cap may seem like a positive, but households are still set to pay around £500 more on bills, as the government’s Energy Price Guarantee (EPG) will end in April.

The EPG currently reduces annual bills to £2,500 for a typical UK household by subsiding the full amount, but this is set to rise to £3,000 from April.

The Energy Bills Support Scheme which gives consumers £400 off their energy bills is also planned to end in March, leaving households with less support.

Citizens Advice’s chief executive, Dame Clare Moriarty, has predicted this will lead to double the number of people who can’t afford their bills.

In response to the news, Shadow Climate and Net Zero Secretary Ed Miliband urged the government to take more action against energy firms making record profits to bring down bills. Writing on Twitter he said: ‘It is staggering that Rishi Sunak plans to allow the energy price cap to rise [in] April.

‘All the while, the oil and gas giants rake in the windfalls of war. Labour would use a proper windfall tax to stop prices going up in April.’

Money Saving Expert founder Martin Lewis has written a letter to ministers calling for them to keep the current EPG in place to protect households from rocketing bills.

Several charities, including the End Fuel Poverty Coalition, Age UK, the Joseph Rowntree Foundation and Warm This Winter, have joined the call by signing the letter.

It reads: ‘On current predictions the EPG subsidy may well only be needed from April to July. After that, the underlying price cap currently looks like it may be cheaper than even the current EPG rate of £2,500 a year for a typical household.

‘This means the provisioned Government expenditure on the energy subsidy will be billions less than expected when the plans were made, giving significant headroom to enable a postponement. Plus, maintaining a lower EPG will also help reduce inflation.’

Ofgem chief executive, Jonathan Brearley, said there had been a ‘fundamental shift’ in wholesale energy prices and that there may be an end in sight to the current energy crisis.

He added: ‘It’s a sign that some of the immense pressure we’ve seen in the energy markets over the last 18 months may be starting to ease. If the reduction in wholesale prices we’re currently seeing continues, the signs are positive that the price cap will fall again in the summer, potentially bringing bills significantly lower.’

Photo by KWON JUNHO