ENERGY bills will be capped at £3,000 from April next year, the Chancellor has announced.
The change will come into place when the current £2,500 Energy Price Guarantee (EPG) ends.
Today, as part of the Autumn Budget, Mr Hunt announced that the new £3,000 limit will replace it in April 2023.
It will be in place until a year.
The new guarantee will see the average household pay above the current £2,500 but less than regulator Ofgem’s cap of £4,000.
The Energy Price Guarantee applies to 24million customers on standard variable tariffs (SVTs).
It sees the Government limit the price suppliers can charge customers for units of gas, and replaces the price cap set by Ofgem.
But, you pay for how much energy you use, so your bill could be higher than £3,000 a year.
The news comes following fresh forecasts last week by energy analysts at Cornwall Insight who predicted that a typical yearly bill will cost £3,702 from April 2023 if the guarantee ended.
This is £600 less than was predicted last month.
Cornwall Insight’s April to June 2023 figures released on October 17 predicted the price cap to be £4,347.69.
Below, we explain more about what the EPG means for you, and how much you might expect to pay depending on the type of home you live in until April next year.
What is the energy price cap?
The energy price cap sets a limit on the unit price and standing charge that companies can bill their customers.
The cap is based on wholesale prices over a six-month period.
It was set to soar to £3,549 on average per year from October 1.
But the EPG replaces this – and at the moment bills are frozen at £2,500 for the typical household until April.
From April bills will now be capped at £3,000
It only means firms will be limited in what they charge customers.
You pay for how much energy you use, so your bill could be higher than £3,000 a year.
The price cap affects millions of people on default or standard tariffs offered by the country’s energy providers, according to Ofgem estimations.
An increasing number of energy users are on the price cap as there are limited fixed deals left on the market.
The price cap was originally set up in January 2019 by Ofgem, in a bid to limit how much providers can charge on default energy bills to spare Brits from being unfairly charged.
It has soared to eye-watering heights this year due to the energy crisis.