Energy bills could rise by £500 despite price cap being brought down

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It is believed Ofgem could drop its price cap on Monday, but that doesn't mean bills will get cheaper, according to one consultancy firm

Analysts believe that energy bills could rise by as much as £500 a year on average regardless of an expected reduction in Ofgem's price cap.

The price cap is based on the amount an average household would pay for an annual bill, but households may spend more or less on their energy bills depending on how much they use.However, customers will pay about 20 per cent more on their bills – approximately £500 – as the government’s additional support in the form of the Energy Price Guarantee only partially protects consumers from paying the full price cap.

Meanwhile, energy bill costs will also be hit by the end of the £400 energy rebate scheme which provided a £400 discount split into six instalments. Currently, Ofgem's price cap is set at £4,279 a year for the average household, with the government paying around £1,779 a year to energy suppliers for the average household between September and March.

Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “Regrettably, the forecast for April looks set to leave the price cap above the increased Energy Price Guarantee level, meaning average annual consumer bills will effectively jump by 20 per cent .

 

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