The Energy Price Guarantee (EPG) – the flagship element of the government’s mini budget – will now only apply to all households until April 2023, in a dramatic U-turn announced on 17 October.
The EPG was due to be in place until October 2024 for all domestic energy customers, but the government has now gone back on this plan. It has confirmed that the scheme will only be applicable to all households until April next year.
Newly appointed Chancellor Jeremy Hunt announced the change in an emergency televised statement today (17 October). He said that from April the government will instead look to target energy bill help to those most in need, instead of doing so universally.
The change to how the EPG is run is just one of several scaled back or amended measures that Hunt’s predecessor Kwasi Kwarteng announced in the mini-budget in September 2022.
That mini-budget has now changed dramatically. Find out everything that was announced in the mini-budget and how it's now changed.
Read on to find out what this latest change could mean for your future energy bills.
Get help with your household bills with our latest cost of living advice and tips
How will the revised Energy Price Guarantee work?
The EPG was due to freeze energy unit rates from now until October 2024 for customers in England, Scotland and Wales. But it will now only be applicable to domestic customers’ energy bills until April 2023.
That means that if your energy prices are now at the fixed rates – somewhere around 34p per kWh of electricity and 10.3p per kWh of gas – they will stay like that through winter. You will also continue to receive the £67 (or £66) a month top up payments via your energy company, in the Energy Bills Support Scheme (EBSS).
From 1 April those top-up EBSS payments will stop, and unit rates are likely to increase as the EPG stops and prices will be back to those set by Ofgem's price cap. Households are likely to see a considerable jump in their energy bills.
Jeremy Hunt (pictured) has said that at that point, low-income households will receive different support for their bills. But what this looks like and who will be eligible has not been made clear yet.
If you are on a fixed tariff at the moment, your payments will stay as they are until your contract ends. If your fixed tariff is set to continue past 1 April and is currently being reduced by the EPG, it will go back to its previous rates from 1 April.
Energy prices for suppliers will still continue to change while the EPG is in place, but the government will be paying the excess instead of customers.
A new energy bill review for those most in need
Jeremy Hunt said the Treasury instead of continuing the EPG from April 2023, the government will conduct a review into how - and how much - different groups of people will need help paying their energy bills from that point onwards.
He plans to design a new approach to save taxpayers money while targeting support to those most in need of financial help to afford their energy payments instead.
It's not yet clear who will be eligible for this or what the support will be.
Find out more about the help available to pay your energy bills
What’s the long-term plan for energy bills?
Prime minister Liz Truss has promised a review of energy regulation to create a more affordable system in the long term. This will include an Energy Supply Taskforce designed to get energy suppliers as well as producers of renewable energy to negotiate contracts that reduce energy prices in the long run.
The government also wants to increase supplies of various types of energy. With this in mind, it has lifted the ban on fracking, which extracts oil and gas from deep in the earth. The practice was previously banned due to potentially polluting ground and surface water and threatening wildlife.
Truss wants the UK to be a net energy exporter by 2040, through a range of domestic energy production including fracking, nuclear and renewable energy generation. She also announced a review into how the country delivers net zero carbon emissions by 2050.
Chaos and U-turns have heaped confusion and uncertainty onto struggling consumers
Rocio Concha, Which? Director of Policy and Advocacy, said:
‘The chaos and U-turns of recent weeks have heaped confusion and uncertainty on consumers - who were already facing the worst cost of living crisis for decades. Now, households up and down the country will be worrying about what will happen when universal support with energy bills comes to an end in April.
‘The government must clarify how they will support the most financially vulnerable after April and ensure that as energy prices remain incredibly high, consumers are not left struggling to make ends meet.
‘The government must also go all out to turbocharge the adoption of energy efficiency measures - such as home insulation - to help reduce households' energy bills in the long-term.’
Get help with your household expenses: head to our cost of living tips and advice and find out how to get help if you're struggling to pay your energy bills
source https://www.which.co.uk/news/article/the-governments-energy-price-guarantee-will-now-end-in-april-2023-a64rH5g7tCGO