Cost of energy bill support to increase as price cap rises
The government will have to pay billions of pounds more to support households with their energy bills from January, after the regulator increased its energy price cap.Under the Energy Price Guarantee , the typical household is currently paying £2,500 a year for energy.Energy research firm Cornwall Insight said the increase would worry the government, which is "shouldering the billions of pounds needed to compensate suppliers the difference".
Under the EPG, suppliers can charge a maximum of 34p per unit for electricity and 10.3p for gas until the end of March. It means the government's support will save typical households around £1,779 a year compared with what they would have had to pay under the regulator's cap.On Wednesday, Chancellor Jeremy Hunt said thatto stop the UK being "blackmailed" by people like Russian President Vladimir Putin.
Firstly, it allows a better estimate of the cost to the government of its policy - even though events in Ukraine, for example, could still have a massive impact on the final bill. "This highlights the nature of the wholesale market risk that the government is taking on by deciding to extend the EPG... with the consequence that the full costs may be potentially higher than currently budgeted for," said Craig Lowrey, principal consultant at Cornwall Insight.
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