The energy price guarantee remains in place as a backstop until the end of March 2024, Ofgem chief executive Jonathan Brearley told the Public Accounts Committee on 25 May 2023. After that date, the Department for Energy Security and Net Zero will consult on arrangements for vulnerable consumers, according to the development. The guarantee had been expected to fall away earlier because the energy price cap had dropped below the level at which it applied.
Brearley set out the numbers behind the cap. The cost to an average household for its energy use was about £3,300, with the price guarantee paying part of bills so that they were fixed at £2,5001. A fall in wholesale gas and electricity prices brought the cap to £2,074 for an average annual bill, a drop of roughly £1,200 a year1. He said bills would fall by around £420 directly, and that the new level meant the guarantee would not apply: "since the new price cap is going to be £2,074, that policy will not apply"1.
"the energy price guarantee remains as a backstop if prices spike upwards again, until the end of March 2024"
The committee session dealt mainly with the collapse of Bulb Energy and its sale to Octopus Energy. The National Audit Office reported in June 2022 that £0.9 billion had been spent by Government on running Bulb through the special administration regime in 2021-20221. Octopus was identified as the acquirer of Bulb's customers, business assets and liabilities, including customer credit balances, in October 2022, after a delayed sale1. The transaction completed on 20 December1. Costs for the special administrators, their legal advisers and Lazard totalled £49.9 million at the end of January1. Brearley said the repayment should be made by September 20241.
| Measure | Position given to the committee |
|---|---|
| Energy price guarantee | Backstop until end of March 20241 |
| Energy price cap | £2,074 for an average annual bill1 |
| Energy bills discount scheme | In place for the year1 |
| Bulb special administration spend | £0.9 billion in 2021-20221 |
| Administrator and adviser costs | £49.9 million at end of January1 |
Brearley said bills were still around £2,000 a year, against roughly £1,100 to £1,200 before the gas crisis, and that many households would struggle to pay1. He said it was very hard to predict the direction of prices, and that every projection he had seen of how the gas market might evolve had turned out to be substantially wrong1. On supplier resilience, he said Ofgem had moved to regular stress tests of every retail company, and that the sector was in a much more resilient position than in mid-2021, though not a perfect one1.
Why it matters for households
The guarantee was a ceiling on the unit price of gas and electricity for households on standard variable and default tariffs. While the cap sits below the level at which the guarantee bites, it does not affect what a household pays. Its value is as insurance: if wholesale prices rise sharply again before the end of March 2024, the guarantee limits how much of that increase reaches a bill. After that date, no equivalent backstop has been reported.
For a home's energy independence, the practical effect is that the floor under household exposure to wholesale prices is time-limited. The cap is reset periodically by Ofgem, and the level of protection it gives depends on where wholesale prices stand at each reset. The consultation on vulnerable consumers, once it begins, will concern the arrangements that sit outside the cap, such as repayment plans and support for those who cannot pay. Details of that consultation have not been reported.
The Bulb figures show the other side of supplier failure: costs met through the special administration regime and recovered through bills. The supplier licensing and supplier failure arrangements determine how a failed supplier's customers are moved and how those costs are spread. Households with a complaint or a dispute about billing or service have routes through the energy complaints and redress system.
What happens next
The energy price guarantee remains as a backstop until the end of March 20241. The Department for Energy Security and Net Zero will then consult on arrangements for vulnerable consumers, according to the development. The repayment relating to the Bulb transaction should be made by September 2024, Brearley told the committee1. The Department has not set out a date for the consultation.
Sources1 cited
- [](https://committees.parliament.uk/oralevidence/13238/html/), committees.parliament.uk