Energy minister Grant Shapps has ordered suppliers to pass on energy savings to consumers’ bills as quickly as possible. Households across the UK have been struggling with the worst effects of a fossil fuel energy crisis, energy bills reached record-high levels in the past year. This was primarily due to the skyrocketing wholesale gas and electricity prices sparked by supply constraints and the slashing of the normal amount of imports arriving from Russia. As gas prices begin to stabilise, experts have predicted that energy bills could fall this year.
On Monday, energy regulator Ofgem reduced its price cap to £3,280 from April 1, significantly lower than the £4,729 that it expected a typical household to be paying in January.
Meanwhile, experts at Cornwall Insight predicted that the Ofgem price cap, which limits the unit price energy suppliers can charge, will continue to reduce this year, with average bills of £2,153 a year from July and then increasing slightly to £2,161 from October this year.
At a speech at Chatham House today, Mr Shapps, the Energy Security Secretary, highlighted his goal for the UK to have amongst the cheapest wholesale electricity prices in Europe.
He was expected to say: “I have one overriding mission in this new job: for the UK to have amongst the cheapest wholesale electricity prices in Europe. This is critical to consumers, to our country and to our planet.
“Making the most of our position as a world-leaders in renewables and nuclear technology, home-grown sources that will shield households from the worst excesses of the volatile global fossil fuel markets. And suppliers must be ready to pass those savings onto consumers.
“Families have seen the impact on the pounds in their pockets of Putin’s illegal march on Ukraine a year ago – and it has opened the world’s eyes to just how vulnerable we are to tyrants like him.
“Working towards this overarching goal of cheaper wholesale electricity will mean we will be powering Britain from Britain, increasing our energy security and independence – the kind of independence that comes from having the four biggest wind farms off our shores.
“And all this will be better for our planet – energy security and tackling climate change are ultimately two sides of the same coin.
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“And it will be this – not the eco-extremists like Extinction Rebellion causing disruption and dismay – that will have people voting with their feet as they see the benefits of achieving net zero.”
Over the last few months, wholesale gas prices have been plunging. Last month, they dropped to an 18-month low, hitting levels not seen since before the conflict in eastern Europe broke out back in mid-February of 2022.
But not only were prices impacted by Russian President Vladimir Putin’s illegal war, but so too were they affected by issues with France’s nuclear fleet, analysts say.
According to Markus Krebber, the head of Germany’s biggest utility RWE, we can expect the situation to remain calm now that this issue has been resolved.
Meanwhile, the Energy Secretary also hinted this week that the upcoming April 1st increase to the Government’s Energy Price Guarantee will be scrapped.
Within weeks April, the Government is set to increase the price cap on household energy bills by £500 to £3,000, in a move that would likely push more families into fuel poverty.
As households brace for a staggering 20 percent increase in energy bills, Mr Shapps said that he was “sympathetic” to calls for more support for struggling families.
He told the Times: “I completely recognise the argument over keeping that price guarantee in place, and the chancellor and I are working very hard on it. I’m very sympathetic to making sure that we protect [people]. We’re looking at this very, very carefully.”
