Energy price guarantee to remain for another three months - report

Chancellor Jeremy Hunt is reportedly set to extend the government’s £2,500 energy price guarantee for a further three months.

According to The Times, Hunt will retain the guarantee for three more months until wholesale prices have fallen so far that it becomes unnecessary.

The energy price guarantee limits gas and electricity tariffs so that the typical household bill is no more than £2,500 a year. That threshold was due to rise by £500 from April.

It was understood the government has told energy companies to prepare for the £2,500 energy price guarantee to remain in place. It will cost the government about £3bn. A Treasury spokesman said no decision had been made. However, a Whitehall source confirmed to The Times that the guarantee was now expected to remain at £2,500.

Under the energy price guarantee, the taxpayer subsidises bills to shield households from the full costs they would otherwise have faced under the energy price cap, which is set by Ofgem based on suppliers’ costs.

Under the current price cap and without the guarantee, the typical household bill would be £4,279 a year.

A three-month extension of the guarantee would take it July, when Ofgem’s price cap is expected to decline to around £2,100 a year.

The government’s universal £400 subsidy on household energy bills comes to an end in April.