UkThe Office of Gas and Electricity Markets, a UK energy regulator, on Monday reduced its price cap on energy bills for households starting April.
According to Reuters, Ofgem lowered the cap to a yearly cost of 3,280 pounds ($3,925.18) from the current 4,279 pounds for a dual-fuel household, which shows a reduction in the wholesale prices of energy.
Report says that, Ofgem modifies the cap each quarter.
Meanwhile, the regulator said, “In July, the price restriction can be again decreased if wholesale prices keep declining, potentially lowering bills.”
However, a government-backed Energy Price Guarantee has replaced the cap, which established a maximum amount suppliers could charge consumers for each kilowatt hour of energy they consumed.
This makes the price cap reduction by Ofgem to have just little significance and cause small relief.
For EPG to rise to 3,000 pounds a year for average consumption from April, up from 2,500 pounds currently, Ofgem said, “This means that, from April and without further changes in government policy, energy bills for a typical household will rise by about 20%.”
According to Ofgem’s Chief Executive Jonathan Brearley, “Although wholesale prices have fallen, the price cap has not yet fallen below the planned level of the Energy Price Guarantee. This means that under current policy, bills will rise again in April.”
“Prices are unlikely to fall back to the level we saw before the energy crisis. Even with the extensive package of government support that is currently in place, this is a very tough time for many households across Britain,” Brearley added.
After the Covid-19 lockdown in 2021, European energy prices began to rise and there was a surge in 2022 because of Russia’s invasion of Ukraine.
