Chancellor Jeremy Hunt announces EPG duration reduction

The then Chancellor Jeremy Hunt announced on 17 October 2022 that the Energy Price Guarantee (EPG) would only last for six months, ending at the end of March 2023, rather than the two years originally set out¹. The scheme had been announced by the then Prime Minister Liz Truss on 8 September 2022 and introduced from 1 October, capping typical consumption at £2,500 a year¹. The EPG limited the increase in typical bills to 27% in October 2022, against a price cap that Ofgem had said would rise by 80% to £3,549 from 1 October¹.

The guarantee worked by fixing unit rates for domestic customers, with the government paying suppliers the excess rather than households³. For direct debit customers in England, Scotland and Wales, unit rates and standing charges worked out at around 34p per kWh for electricity with a standing charge of 46p per day, and 10.3p per kWh for gas with a standing charge of 28p per day³. Rates varied by region and by tariff type³. The support was applied automatically, and households did not need to apply³.

"On 17th October 2022, the UK government announced that it would U-turn on its pledge to freeze all household energy prices for two years."

The change was later modified. In the Autumn Statement 2022, the Chancellor said the EPG would last for a further year from April 2023 but would increase from £2,500 to £3,000 for typical annual consumption, running to the end of March 2024¹. The Chancellor also announced that the EPG would remain at £2,500 for an additional three months to the end of June 2023². The EPG ended on 31 March 2024².

Sources: Commons Library research briefings¹

The EPG became less generous in July 2023, increasing to £3,000 a year, but a fall in the price cap that month meant the EPG no longer set maximum prices and consumer bills fell¹. The price cap for July to September 2023 fell to £2,074¹. The fall in the cap to below EPG levels meant consumer bills fell for the first time in almost three years and the EPG was no longer a cost to government². The cap fell again in October 2023, April 2024 and July 2024¹.

Why it matters for households

The EPG was a temporary cap on unit rates, not a cap on bills. Annual bills were never capped: households using more energy paid more, and those using less paid less². Prices also varied by region and were higher for customers paying by quarterly bills². When the guarantee was shortened, the protection it gave against wholesale price rises had a fixed end date, and the level of support beyond it was not settled at the time of the announcement. E3G noted that with the Guarantee set to end in April 2023, average household energy bills could rise to £3,500 to £4,300 the following year⁴. The Energy Saving Trust said it was waiting on further details on what support may be available after April 2023⁵. For a household's energy independence, the episode showed how far domestic bills depended on a scheme funded by the Exchequer rather than on the home itself. The Commons Library later noted that with little immediate prospect of savings from fixed tariffs or substantial further cuts in the price cap, the only way to substantially reduce energy bills while still adequately heating and powering homes is to improve the energy efficiency of properties².

What happens next

The EPG ran to 31 March 2024, after which it was not needed to set maximum prices again². The price cap continued to set maximum prices, with Ofgem releasing caps quarterly³. The cap for October to December 2023 fell to £1,923¹.

Sources5 cited

1. [](https://researchbriefings.files.parliament.uk/documents/CBP-9428/CBP-9428.pdf), researchbriefings.files.parliament.uk
2. Author: BOLTON, Paul, researchbriefings.files.parliament.uk
3. Liz Truss's energy guarantee puts price cap at £2,500 for a typical household for two years - Which?, which.co.uk
4. Future UK energy price support - E3G, e3g.org
5. Installing solar and saving energy - Energy Saving Trust, energysavingtrust.org.uk