Ofgem will announce the level of its price cap for April to June on February 27th, Energy UK said in a blog published on 17 February 2023. Within days of that announcement, energy suppliers will need to write to households with new prices for the coming quarter1.
Energy UK, the industry body, said that in the absence of a government decision to maintain the Energy Price Guarantee (EPG) level, those prices will be set at the higher level of a £3,000 average annual bill1. The government has set out plans to increase the rate of the EPG in April from £2,500 to £3,000, alongside plans to end Energy Bill Support Scheme payments1.
The body said the price cap is likely to remain well above £3,000 in the meantime, and cited industry estimates of the cap falling to £2,362 for an average annual bill by July1. It said recent falls in wholesale prices have shaved an estimated £70bn off the government's financial support costs, but that hedging means these will not be fully felt in customer bills or the price cap until the summer and beyond1.
Energy UK set out the effect it expects on household payments:
| Measure | Before | From 1 April |
|---|---|---|
| Average household direct debit for energy | £142 per month | £250 per month |
The £142 figure is calculated on six months capped at a £2,500 annual bill, pro rated, less £400 Energy Bill Support; the £250 figure is calculated on a £3,000 average bill split over 12 months1.
Energy UK cited National Energy Action's anticipation that, without intervention for this April, an additional 1.7 million households will become fuel poor, and Citizens Advice analysis estimating the change will double the number of people unable to afford their energy bills from April, to around 1 in 51. It also cited polling finding that 2 in 5 people in the UK are rationing essentials to keep up with debt repayments, with inflation still running at over 10% and household bills around 2.5 times the pre-pandemic rate1.
"the EPG remains the only practical way of getting support to all who need it now"
Energy UK said an announcement would need to be made by 2 March to allow enough time to ensure that the right rates are loaded onto traditional prepayment meters1. It said the Chancellor has not yet ruled out any changes, but that signals so far have been that the EPG will rise in April as planned1.
Why it matters for households
The price cap sets the maximum a supplier can charge for each unit of gas and electricity on a default tariff, so the 27 February announcement fixes the rates that apply to most households from April. The Energy Price Guarantee sits underneath that: it limits what a typical household pays, and if it rises to £3,000 as planned, the cap level matters less than the guarantee level for most homes. Energy UK's figures put the combined effect of a higher guarantee and the end of the support payments at a rise in the average monthly direct debit from £142 to £250.
For a household's energy independence, the practical point is the gap between what wholesale prices suggest and what bills show. Falling wholesale prices do not pass through immediately because suppliers buy in advance, so a household's own consumption and the tariff it sits on determine its exposure over the next quarter. The notice a supplier must give before a price rise governs when the new figures reach a household, and the price cap announcement dates set the rhythm for the rest of the year. Whether the cap applies in Northern Ireland is a separate question, as the cap is set for Great Britain.
What happens next
Ofgem announces the April to June cap level on 27 February 2023. Suppliers must then write to households with new prices within days1. Energy UK said any change to the EPG needs to happen on or around the same date to avoid multiple, confusing communications, and that an announcement would need to be made by 2 March for prepayment meter rates to be loaded in time1. It said delaying a decision until the Spring statement risks exposing the most vulnerable to more expensive rates1.