The UK government has ditched plans to end its household energy bill support scheme at the end of March and extended it by three months, in an attempt to mitigate another sharp rise in prices due to take in April.
Average annual bills will now stay at £2,500 pounds instead of £3000 under a price cap system, the Treasury said in a statement on Wednesday. Falling wholesale prices have given the government some room to manoeuvre and mean support won’t be needed beyond June as warmer weather also kicks in.
The announcement, trailed for weeks, comes just hours before Finance Minister Jeremy Hunt delivers his spring Budget statement of tax and spending measures.
Under the energy price guarantee (EPG) the government caps the price that households can pay and reimburses energy companies for the difference between that and the cost of buying power on wholesale markets.
If the price cap system was still in place, reflecting the real cost of energy, annual bills would have been £4,279 from January this year.
Reporting by Frank Prenesti for Sharecast.com