By Nina Chestney
LONDON, Feb 27 (Reuters) – Britain’s energy regulator Ofgem on Monday lowered the price cap on energy bills that households will pay from April, but that will not bring much relief to consumers as costs continue to increase.
Ofgem lowered the cap to an annual level of £3,280 ($3,925.18) for a typical household using gas and electricity from £4,279 today, reflecting a recent fall in wholesale prices Energy.
The cap sets a maximum price that suppliers can charge consumers for each kilowatt-hour (kWh) of energy they consume, but has been replaced by a government-backed energy price guarantee (EPG) that caps the maximum energy costs.
From April, the GPE will increase to 3,000 books per year for average consumption, compared to 2,500 books currently.
This means that from April and with no further change in government policy, the energy bill for a typical home will rise by around 20%, according to Ofgem.
“Although wholesale prices have fallen, the price cap has not yet fallen below the expected level of the energy price guarantee. This means that with the current policy, bills will rise again in April,” said Jonathan Brearley, CEO of Ofgem.
Ofgem updates the limit quarterly. If wholesale prices continue to fall, the price cap could be lowered again in July, which could reduce bills, according to the regulator.
Wholesale prices have fallen almost 50% since December, but are still significantly higher than in previous years.
“Prices are unlikely to fall back to pre-energy crisis levels. Even with the extensive public support package now in place, these are very difficult times for many UK households,” Brearley added.
European energy prices started rising in late 2021 as the world emerged from COVID-19 lockdowns, then soared last year after Russia invaded Ukraine.
As a result, the cost of wholesale gas and the price suppliers have to charge per unit of energy have risen sharply, prompting the government to step in to help consumers.
($1 = 0.8356 pounds) (Reporting by Nina Chestney in London; Additional reporting by Muhammed Husain in Bengaluru and William Schomberg in London; Editing in Spanish by Ricardo Figueroa)