Energy prices have been rising at a rapid pace over recent years, significantly increasing the cost of household bills for homeowners across the UK.
The widespread issues being faced provide some long-term challenges, which begs the question – what happens next to the price of energy?
What’s going on right now with energy prices?
There’s been a lot of back and forth. Previously, energy regulator Ofgem would set the maximum prices suppliers could charge households for each unit of energy. But, Russia’s invasion of Ukraine put plenty of stress on energy infrastructure, leading to skyrocketing prices.
So, in October 2022, the government put an energy price guarantee in place so that a typical household’s use of gas and electricity would lead to an annual bill of no more than £2,500.
This guarantee was supposed to last two years but was changed to end in April 2023 instead. However, with all the political changes of late, incumbent Chancellor Jeremy Hunt recently announced the energy price guarantee would remain – but with a £500 uplift to £3,000 from April 2023.
When will the energy price cap be reviewed?
The next quarterly price cap review from Ofgem will take place on 27th February 2023.
But, the energy price guarantee has taken over from the previous Ofgem price cap system. Changes to the new limit come into play next April, but energy prices are still soaring.
The recent changes in the 2022 Autumn Statement mean that the energy price guarantee of £3,000 will last from April 2023 to April 2024, and there’s no concrete news as to when this will be reviewed or updated.
What options do you have?
Unfortunately, not many. The energy price guarantee from the government is lower than the Ofgem price cap, meaning that these high bill figures are already heavily subsidised.
Of course, cutting down usage where possible, improving your home insulation, and increasing energy efficiency will help. But it’s not realistic or affordable for everyone to make significant reductions or changes.
There are a few extra options and support for those struggling financially. Some energy companies have hardship funds, but the exact level or type of help can vary. There is also the possibility for certain households and businesses to qualify for government support.
Is there any government help available?
Yes, but primarily for low-income households, pensioners, and people with disabilities. In 2023, the government cost of living payments will look like this:
- £900 – for the lowest income households.
- £300 – for pensioners.
- £150 – for homes with a person on an eligible disability benefit.
Vulnerable families can also request help from the Household Support Fund and the Warm Home Discount scheme.
There is also an Energy Bill Relief scheme for businesses. It applies to non-domestic energy customers across the UK and offers discounts on wholesale prices. The size of the energy price discount will depend on your type of business.
It’s a challenging situation for both households and businesses. It doesn’t look like energy prices will be going down to a lower level any time soon.