Energy Security Secretary Grant Shapps responds to new Ofgem price cap

See below for a statement from Energy Security Secretary Grant Shapps on Ofgem’s newly announced price cap for Q3 2023, along with an explainer on what the new cap means for UK households.

Energy Security Secretary Grant Shapps said:

“It’s positive households across the country will see their energy bills fall by around £430 on average from July, marking a major milestone in our determined efforts to halve inflation.

“We’ve spent billions to protect families when prices rose over the winter covering nearly half a typical household’s energy bill – and we’re now seeing costs fall even further with wholesale energy prices down by over two thirds since their peak as we’ve neutralised Putin’s blackmail.

“I’m relentlessly focused on reducing our reliance on foreign fossil fuels and powering-up Britain from Britain to deliver cheaper, cleaner and more secure energy.”

OFGEM PRICE CAP EXPLAINER

How much will I pay under the new price cap compared to previously?

The new energy price cap is the lowest level it has been since October 2022. From July 1 the cap will be set at an annual level of £2,074 – £426 less than the £2,500 households were paying on average under the Energy Price Guarantee.

Why are energy bills coming down?

The new price cap reflects wholesale energy prices having fallen by around two thirds since their peak. This has been driven by boosting alternative sources of supply, including through the UK’s LNG import infrastructure which provides access to diverse sources of gas.

The government is working hard to bring down energy prices further. Our Powering up Britain plans lay out how we’re driving significant investment in new renewable and nuclear projects as part of wider efforts to boost our energy security and independence – and we want to make sure these efforts are felt by household in lower bills.

Why did the government introduce the Energy Price Guarantee?

The Energy Price Guarantee was set at £2,500, which was the maximum a typical household would have to pay towards their energy bills. We introduced this because the energy price cap went up as wholesale prices increased, reaching £4,279 for a typical household at its peak.

What happens to the Energy Price Guarantee now?

Energy prices are expected to remain below the Energy Price Guarantee level, now at their lowest since before Russia’s illegal invasion of Ukraine, meaning the return to Ofgem’s price cap setting the amount suppliers can charge consumers for their energy instead.

However, from July, a discount specifically for prepayment meter users under the Energy Price Guarantee will mean they will on average save around £22 a year, bringing them in line with those paying by direct debit.

What other support is there for households struggling with the cost of living?

We stepped in to pay around half of the typical household energy bill this winter, and by the end of June a typical household will have saved £1,500, due to the Energy Price Guarantee and the Energy Bills Support Scheme.

We’re also providing additional support to the vulnerable, including a £900 payment for those on means-tested benefits, £300 for pensioner households and an extra £150 for people on an eligible disability benefit.