Chancellor Jeremy Hunt has just finished his 2023 Budget and, while there is a lot to unpack for the whole country, we are most interested in energy prices.
There are two main things we need to look at.
The Energy Price Cap, which is set by Ofgem, and was reduced from £4500 down to £3200 at the beginning of March 2023.
Ofgem work this out based on wholesale prices and fuel availability.
What this meant in practice is our bills did not change, but the amount the government had to pay to the energy companies fell by £1300 per average household.
So, while we didn’t save money personally, less taxes were given to big oil companies.
Today Mr Hunt froze the government Energy Price Guarantee at its current levels for the next 3 months.
So, that’s still 34p per kWh or, as the government put it, £2500 per average household.
One thing that bill payers have lost is the Energy Bills Support Scheme, which was £400 or £66 a month.
So if you were receiving that you bills will be £66 a month more from April.
So, what about the future?
It is predicted that Ofgem’s Energy Price Cap will come down to £2000 for the average family as they predict a 19% drop wholesale rates and remain flat until the end of 2023.
But this is still volatile
Predicted Energy Rate from April 2023
According to everyone’s favourite money saving expert, Martin Lewis, the new rates on electricity will be:
Standing charge will rise from 46.4p to 53p
and unit rates go from 34p to 33.2p
And MSE also predict that gas will be:
Standing charge will rise from 28.5p to 29.1p
And a unit – 10.33p to 10.3p
Ofgem predict that their Energy Price Guarantee will drop to as low as £2000 (average family home) and us, as bill payers, are only required to pay the lower of either the Energy Price Guarantee or Energy Price Gap.
The cap may vanish in July, but if Ofgem are correct, bills should remain lower for the rest of 2023.
This also means we will see the return of fixed term contracts for the price of bills – we would advise waiting a few months before signing up as we have no idea what the wholesale market will do in 2024.