Is Energy Price Guarantee being extended after June 2023?

With energy bills set to fall from July, many are wondering what will happen to the Energy Price Guarantee.

This ‘cap on a cap’ was brought in as a temporary measure during October 2022 to help households with soaring energy costs.

Like the Energy Price Cap, it’s often expressed in an easy-to-digest annual figure, which reflects what a ‘typical’ household might expect to spend in a year on energy.

Basically, it sets a top amount you can be charged per kWh (kilowatt hour) of gas and electricity you use, plus daily standing charges.

It dosn’t cap the actual bill.

But with Ofgem’s announcement that the energy price cap will fall from £3,280 per year to £2,074 for the typical household from July 1, what will happen to the EPG?

Will it continue, and if so, what effect will it have on energy bills?

Let’s find out.

Will the Energy Price Guarantee continue?

The short answer is yes – but the ‘cap on a cap’ will rise.

At present, the Energy Price Guarantee is £2,500 – but this will rise to £3,000 from July for households without a prepayment meter.

So, for the first time, the ‘cap on a cap’ is higher than the actual cap.

This means the EPG is effectively redudant for the time being.

The government says:

‘From July 1, 2023, households without a pre-payment meter will no longer receive an Energy Price Guarantee discount on their gas and electricity bills.

‘This is because the Ofgem price cap will be lower than the Energy Price Guarantee level, meaning households will pay the rate set by the price cap.’

However, the Energy Price Guarantee will remain in place as a safety net until the end of March 2024 should energy prices increase above £3,000 per year.

What about households on a prepayment meter?

From 1 July the average prepayment meter user will no longer pay more for their energy than those on direct debit, saving around £21 per year.

This will be delivered through the Energy Price Guarantee, which will provide a unit rate discount to gas rates (electricity ones are already lower than the direct debit ones).

The discount will be reviewed every 3 months in line with future changes to Ofgem’s price cap, and is applied automatically, so you don’t need to contact your supplier or use vouchers.

What other help is available?

If you’re struggling to pay, Ofgem’s advice is to contact your supplier.

It says: ‘Our rules mean suppliers must offer payment plans you can afford and you can ask for ‘emergency credit’ if you use a prepay meter and can’t top up.’

The Fuelbank Foundation adds:’Many suppliers have helpful schemes for their customers who are struggling to pay for an energy debt and may also have schemes for customers who require a household appliance to replace one that’s broken or in poor working condition.

‘There are also some government payments that you might be eligible for. It’s best to contact your supplier to find out what support is available.’

You can also use this online grants and benefits checker to see what help you’re entitled to.

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