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The government has confirmed the Energy Price Guarantee (EPG) will remain at £2,500 until June.
The decision, which had already been widely trailed, was officially confirmed by the Treasury on Wednesday (15 March) morning ahead of the Budget.
Not raising the EPG to £3,000 will cost the Treasury an extra £3 billion, with the total price of the EPG from April to June estimated at £4 billion. This compares to the figure of £12 billion to run the EPG at £3,000 which was predicted in the autumn. Since then falling wholesale costs have slashed the cost, leading to calls for the government to reassess the proposed rise.
Government predicts the typical household will save £160 because of the u-turn with the total savings from the EPG and the Energy Bills Support Scheme expected to average out at £1,500 per household.
While April’s energy price cap figure of £3,280 remains above the level of EPG it has been widely predicted that falling wholesale costs should see the dip below £2,500 in the summer. Under current government plans the EPG would rise to £3,000 at that point and remain at that level until March 2024.
Chancellor Jeremy Hunt said: “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.”
Responding to the news Greg Jackson, founder and chief executive of Octopus Energy, said: “The extension of the energy bill support is a huge relief for millions of customers.
“Wholesale costs are falling, but they are still significantly higher than normal levels. This help is vital not only for households, but also for helping the economy and tackling inflation.”
A spokesperson for EDF said: “It is welcome news that government has decided to continue with the Energy Price Guarantee scheme at £2,500.
“We know increasing the EPG to £3,000, even for just a short-term, would have been unmanageable for many of our customers.
“We are reviewing the details of the discounts the government has published today and will get these updated on our systems as soon as possible so customers can understand any small changes they may see.”
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