Despite falling wholesale energy prices, households are still facing eye-watering bill hikes from April.
What is Ofgem's price cap, how does the Government's Energy Price Guarantee affect it and what does it all mean for household bills?
– What is Ofgem's price cap and what does it mean for me?
Regulator Ofgem has cut the amount suppliers can charge households for energy but bills are still set to rise by an average £500 from April.
– What is Ofgem's price cap?
The energy price cap was introduced by the Government in January 2019 and allows suppliers to recoup their costs while making sure consumers do not pay more than they should. It does this by setting a maximum suppliers can charge per unit of energy.
– Why is it falling and how much is it now?
From April 1, the energy price cap will be set at an annual level of £3,280 for a dual-fuel household paying by direct debit based on typical consumption, a reduction of almost £1,000 from the current £4,279.
The fall reflects recent drops in wholesale energy prices – the amount energy firms pay for gas and electricity before supplying it to households.
The £3,280 figure indicates how much consumers on their energy suppliers' basic tariff would pay if the Government's Energy Price Guarantee (EPG) was not in place.
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