Energy price guarantee to be extended at £2,500 - what the change means for you

The Chancellor has confirmed that the energy price guarantee, which caps average household bills at £2,500, will be extended.

The price guarantee will remain at its current level from April to June, Jeremy Hunt announced during his fiscal statement on Wednesday (March 15). It had been due to rise to £3,000 in April and the cost of scrapping the planned 20% increase will amount to around £3 billion.

It comes as the amount energy suppliers are able to charge households was lowered by Ofgem in its latest announcement which was made last month. On Monday (February 27) the regulator confirmed the price cap, effective from April 1, would drop from the current £4,279 per year to £3,280 for the average household.

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Ofgem said the reduction of almost £1,000 reflects recent falls in wholesale energy prices. Chancellor Jeremy Hunt said: “High energy bills are one of the biggest worries for families, which is why we’re maintaining the energy price guarantee at its current level. With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.”

However, consumers still face having to find an extra £67 a month to pay their energy bills from April when the Government’s separate Energy Bill Support Scheme – which has seen all households receive six monthly payments of £66 or £67 direct to their energy accounts – comes to an end.

Citizens Advice chief executive Dame Clare Moriarty said the “welcome step” of extending the existing energy price guarantee would protect millions of people from unaffordable energy bills. But