Energy regulator Ofgem has today announced its quarterly update to the energy price cap, and while the cost of energy is set to fall, the reduction of the government’s financial help means most users will still see prices rise. 

From April 1st the energy price cap will be set at an annual level of £3,280 for a dual fuel household paying by direct debit based on typical consumption, a reduction of almost £1,000 from the current level of £4,279. Ofgem says this reflects recent falls in wholesale energy prices.

This means the equivalent per unit price for a typical customer paying by direct debit will be 51p per kWh with a standing charge of 53p per day.

Using these figures, Electrifying.com’s price calculator suggests that a driver with a VW ID.3 electric car covering the average 625 miles per month would still save £175 per year if paying the full daytime rate versus a 1.5TSI petrol Golf filled at £1.48 per litre. If charging overnight at Octopus’ Go tariff of 12.5p/kWh the saving is £809 per year.

Ofgem’s £3,280 figure indicates how much consumers on their energy suppliers' basic tariff would pay if the government’s Energy Price Guarantee (EPG) were not in place.  From April, the government has set the EPG at £3,000 for the typical bill – meaning that consumers will not pay the full level of the energy price cap.

However, this is £500 higher than the current cap which was set at £2,500 for the period to 31st March 2023, meaning consumers will pay more. 

Ofgem says the reduction in its price cap level reflects a ‘significant reduction’ in the cost of buying and providing energy for customers. If it continues, it will mean that by the summer, prices paid by consumers will drop for the first time since the global gas crisis took hold more than 18 months ago.

Ofgem CEO Jonathan Brearley said: “Although wholesale prices have fallen, the price cap has not yet fallen below the planned level of the Energy Price Guarantee. This means, that on current policy, bills will rise again in April. I know that, for many households this news will be deeply concerning.”

“However, today's announcement reflects the fundamental shift in the cost of wholesale energy for the first time since the gas crisis began, and while it won’t make an immediate difference to consumers, it’s a sign that some of the immense pressure we’ve seen in the energy markets over the last 18 months may be starting to ease. If the reduction in wholesale prices we’re currently seeing continues, the signs are positive that the price cap will fall again in the summer, potentially bringing bills significantly lower. However, prices are unlikely to fall back to the level we saw before the energy crisis. Even with the extensive package of government support that is currently in place, this is a very tough time for many households across Britain.”

The next quarterly price cap update will be on 26th May 2023.

An ID.3 driver will still save versus petrol at the new rates