ENERGY PRICES SET TO RISE AGAIN!

IMPORTANT (pls share)

On Mon the new Ofgem Apr-Jul Energy Price Cap’s announced. Yet in practice it’s likely to be not hugely impactful as currently

• It’s GOVT THAT SETS ENERGY PRICES
• And the GOVT plans to INCREASE EM 20% in Apr (I’m campaigning for it not to)

Let me explain in more detail..

The energy price cap (Cap) is set by Ofgem based on wholesale rates – those energy retailers pay.

Until Oct 2022 solely it dictated the max standing charge & unit rates firms could levy. And as in recent times all firms charge near-enough the max, it set the price we paid.

Then in Oct, the Govt introduced the Energy Price Guarantee (EPG), set to last until April 24, which means if the Cap is very high (as it is) the govt reduces what we pay, by subsidising it.

Yet the rule is, if the Cap drops below the EPG, we will then pay the lower amount.

In Apr, the govt plans to increase what we pay under the EPG by 20%. And while wholesale prices have dropped a lot, as the Cap’s time lagged, though the April Cap will drop, it’ll almost certainly still be above the EPG. So bills (eng, scot, Wales) will still rise avg 20%.

Yet its very likely from July, the Cap will be lower than the EPG at its current level (never mind if it rises 20%), so from that point, unless wholesale prices rocket again the EPG will be irrelevant and we will go back to paying the lower Cap price.

Which is why it seems especially futile to subject people to the financial and mental health damage of a 20% rise for three months, especially as the EPG will cost many £billions less than originally thought.

NB The one impact of the April price Cap change is while the overall level is based on the EPG, the cap can change the balance of cost between

• DD and prepay & pay in receipt of bills
• The (already too high) standing charge & unit rates
• We’ll be monitoring this.