2023: What’s going on in the energy market?
Our Energy Specialists have brought together what's happening in the energy market.
The energy regulator Ofgem announces that the price cap will fall to £2,074 from 1 July for the typical household. From July the price cap will determine the unit prices for energy as the amount will be below the government’s Energy Price Guarantee.
The latest analysis from Cornwall Insight predicts that the price cap for an average typical household will be approximately £2,053 from 1 July until 30 September 2023. Ofgem will announce what the exact price cap value will be on Thursday 25 May 2023. Customers are currently not directly impacted by the price cap value because of the government’s Energy Price Guarantee (EPG) which limits a typical household’s energy bill to £2,500 a year. However, if the price cap does drop below the EPG then bills will revert to the price cap unit rates.
Cornwall Insight says that cheaper fixed rate energy tariffs could return as price cap predictions stabilise. Since March Cornwall Insight’s price cap predictions have only shifted by £38, with a typical household now predicted to pay approximately £2,062 per year from July. The stabilisation of the forecasts reflects the decreased volatility in the wholesale energy market, with the relatively mild winter, higher than-predicted European storage levels and reduced demand from consumers, lowering concerns over supply.
The energy regulator Ofgem has said that all energy suppliers in England, Scotland and Wales have signed up to a code of conduct that sets out the practices they should adhere to when fitting prepayment meters, which the regulator plans to make mandatory. Customers must be given more chances to clear debts and forced meter installations will be banned in homes of those over 85 or anyone with a terminal illness, regulator Ofgem said. Those with health conditions such as chronic bronchitis, emphysema and sickle cell disease, which could be worsened by living in a cold home, will also be exempt.
UK energy bills could fall to about £2,024 from July as wholesale gas costs drop. The energy consultancy Cornwall Insight has predicted that, excluding government subsidies, typical annual household energy bills for July to Sept could be £2,024 and from October £2,076. The government’s decision to maintain the Energy Price Guarantee (EPG) at an average of £2,500 for the next three months will mean households are not directly impacted by the £3,280 April price cap.
The government has published a new net zero plan after the High Court ruled the government's existing plans were not sufficient to meet its climate targets. The government was forced to publish the "Powering up Britain" strategy after the High Court ruled, in July 2022, that the government’s current plan was not detailed enough to show how the UK would meet its goal to reduce its greenhouse gas emissions to net zero by 2050.
Chancellor Jeremy Hunt announced, in the Spring Budget, that from 1 April 2023 the EPG will remain at £2,500 until 30 June 2023 instead of the proposed increase to £3,000. The Chancellor also confirmed that people using prepayment meters will receive additional support from 1 July 2023 to bring their bills in line with people who pay by Direct Debit.
BBC News and The Times are reporting that the Chancellor, Jeremy Hunt, is expected to keep the Energy Price Guarantee threshold at £2,500 for a further 3 months instead of the planned rise to £3,000 from 1 April. The Times has been told that the Chancellor will retain the guarantee for three more months until wholesale prices have fallen so far that it becomes unnecessary. 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.
The energy regulator Ofgem has announced that the price cap will decrease to £3,280 from 1 April 2023. Ofgem’s announcement will not affect what customers pay for each unit of electricity or gas because that is limited by the government’s Energy Price Guarantee.
The government's EBSS Alternative Funding £400 online portal, for people who live 'off grid', opens. People who live in a park home, houseboat or off the electricity grid are encourage to apply through the government's online portal or by phone (0808 175 3287 Mon-Fri 8am-6pm).
UK energy bills could fall to about £2,153 from July as wholesale gas costs drop, a report from energy consultancy Cornwall Insight shows. A typical/average domestic energy bill will rise in April - but predictions of subsequent falls may prompt the return of better energy deals and customer switching suppliers.
In a government restructuring the Prime Minister has broken up the Department for Business, Energy and Industrial Strategy (BEIS) to create a new Department for Energy Security and Net Zero (ESNZ). The government says that the new Department for Energy Security and Net Zero, which will be led by Grant Shapps MP, will be “tasked with securing long-term energy supply, bringing down bills and halving inflation”.
The National Grid activated its Demand Flexibility Service (DFS) which pays eligible smart meter users to reduce their energy consumption during peak time events. Eligible E.ON Next customers, who've so far taken part in test DFS events, have saved the equivalent energy of 184 years worth of powering a 50w TV. Over £240k has been paid to E.ON Next customers who saved energy and met their reduction targets, since November 2022.
UK energy bills could fall to about £2,200 from July as wholesale gas costs drop, a report from energy consultancy Cornwall Insight shows. Mild weather in Europe has reduced gas demand but bills will remain higher than the 2021 energy price cap. The energy consultancy Cornwall Insight has predicted that, excluding government subsidies, typical annual household energy bills may fall from £4,279 now to £3,208 from April, and then will ease, from July, to roughly £2,200 for the remainder of 2023.
The government announced that their Energy Bill Relief Scheme (EBRS) will change from 1 April 2023. The current scheme provides a cap on wholesale gas and electricity prices for all non-domestic customers. Under the new Energy Bills Discount Scheme (EBDS), firms will get a discount on wholesale prices rather than costs being capped as under the current one. Heavy energy-using sectors, will get a larger discount than others. The new scheme runs until 31 March 2024.
What’s still important from 2022.A lot happened in 2022 and some of it still affects how the energy market works in 2023. Here’s what’s important:
- The government introduced the Energy Price Guarantee which would keep average annual bills to around £2,500 until 30 June 2023.