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British energy bills are set to fall after the government recategorised certain subsidy costs and axed an energy efficiency scheme, bringing the energy price cap lower.
Ofgem, the energy regulator, has lowered the cap by 7 per cent for the April to June period, bringing it to a level that will see typical households pay £1,641 per year, down from £1,758 currently.
The price cap covers accounts on default tariffs, which currently applies to about 60 per cent of the market. Fixed-tariff accounts will also benefit from the reductions in policy costs introduced by the government.
In its Autumn Budget, the government said it would use taxation to pay three-quarters of households’ contribution to the renewables obligation subsidy scheme and end the ECO energy efficiency scheme, for which consumers were paying via their bills.
Wholesale prices have also fallen. However, the reductions were offset by a roughly £66 per typical household or 17 per cent increase in the costs for upgrading and maintaining electricity and gas networks.
Ed Miliband, the energy secretary, is under pressure to meet the government’s goal of cutting bills by up to £300 a year by 2030.
This is a developing story
