Energy Price Guarantee extended at £2,500 for three months to June 2023

The Energy Price Guarantee (EPG) will stay at £2,500 for a further three months, from April to June 2023, the Chancellor announced on 15 March 2023 as part of the Spring Budget¹. The scheme had been due to rise to £3,000 on 1 April under plans set out at the Autumn Statement¹. It will instead revert to £3,000 from July 2023 until the end of March 2024¹.

The extension is worth £160 in total for a typical household, according to HM Treasury¹. The government said the three-month hold means households will not feel the full force of Ofgem's price cap between April and June, which stands at £3,280¹. The total cost of the EPG from April to June is £4 billion, of which £3 billion is the additional cost of keeping it at £2,500 rather than £3,000¹. The Treasury said energy prices had fallen by 50% since the Autumn Statement, cutting the borrowing needed to fund energy support by two thirds, from £12 billion to £4 billion¹.

The government said lower wholesale gas prices are expected to feed through to lower household bills from July, citing Cornwall Insight data suggesting the Ofgem price cap will reach an estimated £2,100 a year for a typical household¹. The EPG ended on 31 March 2024². The July 2023 price cap fell below the EPG level, so the guarantee was no longer needed to set maximum prices and stopped being a cost to government².

"The Energy Price Guarantee (EPG) will be kept at £2,500 for an additional three months from April to June, saving a typical household £160."

The Budget also ended the prepayment meter premium, which the government said would save 4 million families £45 a year from July¹. National Energy Action, which campaigns on fuel poverty, welcomed both measures but said the Energy Bills Support Scheme had ended, leaving households £67 a month worse off⁴. It estimated 7.5 million UK households would be in fuel poverty, up from 6.7 million⁴.

The £2,500 figure is an annual bill for a household with typical consumption, not a cap on what any household pays². Households using more energy pay more, and those using less pay less². The government also noted that while the EPG remained at £2,500 on 1 April, small tariff changes were possible as suppliers rebalanced between standing charges and unit rates, with implementation determined by suppliers¹.

Why it matters for households

The EPG set a ceiling on unit prices rather than on total bills, so the extension limited how far prices could rise for the three months to June but did not fix what a home paid¹. For a household on a standard variable tariff, the guarantee meant paying less than the Ofgem price cap would have allowed over that period¹. The ending of the Energy Bills Support Scheme at the same time removed £66 or £67 a month in government credit from April 2023, so many households saw bills rise even with the EPG held down⁴. The guarantee's role in a home's energy independence was indirect: it shielded households from the full wholesale price, but it did not reduce the volume of energy a home needed, and it ended once the price cap fell below its level².

What happens next

The EPG was set to revert to £3,000 from July 2023 until the end of March 2024¹. From July, households would pay the lower of the Ofgem price cap or the EPG¹. The government expected lower wholesale prices to feed through to lower bills from July, with Cornwall Insight data cited at an estimated £2,100 a year for a typical household¹. The EPG ended on 31 March 2024².

Sources4 cited

1. Energy Price Guarantee extended for an extra three months - GOV.UK, gov.uk
2. Author: BOLTON, Paul, researchbriefings.files.parliament.uk
3. Understanding the Energy Price Guarantee | Sainsbury's Energy - Electricity and Gas supply in the UK. Save on your energy bills, sainsburysenergy.com
4. Budget reaction: 7.5 million UK households still in fuel poverty - National Energy Action (NEA), nea.org.uk