The energy price guarantee of £2,500 was extended in the March Budget for a further three months, which is welcome news for employees and any small business owners who work out of residential accommodation.
The extension of the energy price guarantee runs from 1 April to 30 June and should bridge the gap to the lower prices predicted for the summer.
The three months of additional support is somewhat less generous than that being given to business customers, who will benefit until 31 March 2024.
The guarantee is a temporary government subsidy that limits the annual energy costs for a typical household. The scheme covers households in England, Scotland and Wales.
· An important point is that the price guarantee is based on a typical household but can be more or less depending on energy usage.
· The price guarantee was set to increase to £3,000 from 1 April, but this increase has now been postponed until 1 July.
· Household energy prices are currently set at the lower of the price guarantee and a price cap. The price cap is set by Ofgem, the energy regulator, and is forecast to be as low as £2,000 for the second half of 2023. So this figure would then apply, rather than the higher £3,000 price guarantee.
Despite the continuance of the price guarantee, many households will still see higher energy bills from April onwards. This is because the £400 government support scheme came to an end in March, which was given as a monthly credit of £66 or £67 against energy bills.
Those on fixed energy deals should keep a watchful eye on energy prices. A fixed price tariff could well be higher than the price cap from July onwards, so it might then be beneficial – if permitted – to move to an energy supplier’s standard tariff.
Details of the energy price guarantee can be found here.