MOST British households will pay lower energy bills from April after the energy regulator Ofgem cut its price cap by 7 per cent, it said on Wednesday.
The reduction follows government plans announced in last year’s budget to ease costs by shifting some renewable energy charges to general taxation and ending a supplier-funded insulation scheme.
“The main driver of today’s reduction is the change to policy costs announced by the chancellor in the budget,” Tim Jarvis, director general, Markets, at Ofgem, said.
The new cap will be 1,641 pounds a year for average electricity and gas use. This is 117 pounds lower than the level set for January to March.
The government said last year it would move 75 per cent of the cost of the Renewables Obligation, which funds renewable power generation, from consumer bills to general taxation from April.
It also said it would scrap a scheme requiring energy companies to fund measures such as insulation and new heating systems for low-income households.
The two measures would remove around 150 pounds a year from average household bills, it added.
However, higher network costs have reduced some of those savings.
Wholesale gas and power prices are a major part of the formula Ofgem uses to calculate the price cap, and these fell over the past few months. But network costs are becoming a larger share of the bill as the network is upgraded.
Network costs rose by 66 pounds compared with the last price cap period, as levies linked to a 24 billion pound upgrade to the country’s energy transmission system began to be added.
The price cap on standard tariffs was introduced in 2019 and currently covers around two thirds of households.
(With inputs from agencies)
