The energy regulator, OFGEM, announced that the energy price cap will rise in April to £1,971 – an increase of £693 for the average household. Without government action, this would be incredibly tough for millions of hardworking families who would have to find an extra £693 a year. So the government has decided to directly help people manage those extra costs. They will help by providing half of this additional cost; a £350 boost. This will make up the £9.1 billion Energy Bills rebate from the Chancellor.
Why have energy costs soared?
The demand for gas is at an all-time high. Energy bills are rising because it is more expensive for the companies who supply our energy to buy oil, coal, and gas. Of the £693 increase in the April price cap, around 80% comes from wholesale energy prices. Over the last year, the price of gas alone has quadrupled. And because over 85% of homes in Britain are heated with a gas boiler, and around 40% of electricity comes from gas, this will hit households.
Gas prices are soaring are global. Across Europe and Asia, a long, cold winter last year depleted gas stores. Disruption to other energy sources like nuclear and wind left us relying more than usual on gas during the summer months.
How the government is helping
Providing £350 to households in 3 ways:
- Spread the extra costs of this year’s energy price shock over time. This year, all domestic electricity customers will receive an upfront discount on their bills worth £200.
2. A £150 Council Tax rebate to help with the cost of energy, in April – and this discount won’t need to be repaid. The council tax rebate will go to to households in Bands A to D.
3. Provide local authorities with a discretionary fund of nearly £150millio to help those lower income households who happen to live in higher Council Tax properties
Also the Warm Home Discount eligibility is being expanded by almost a third so that three million vulnerable households will now benefit, as well as the planned £10 uplift to £150 from October
The Government is doubling its efforts to generate more clean, affordable power in this country to meet the target of decarbonising Britain’s electricity system by 2035
