2023: What’s going on in the energy market?
Our Energy Specialists have brought together what's happening in the energy market this year.
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. At present, the government’s Energy Price Guarantee sees the annual gas and electricity bill for an average home limited to £2,500. The EPG is set to rise to £3,000 in April, but forecasts suggest the limit will soon become redundant. The energy consultancy expects the annual bill for an average household to remain at close to that level for the rest of the year.
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, like glass, ceramics and steelmakers, will get a larger discount than others. The new scheme will run until the end of March 2024.
Reminder of 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 a breakdown of what’s important:
- Ofgem announced that their price cap review will move from every 6 months to every 3 months. However, the government’s Energy Price Guarantee (EPG) temporarily supersedes the price cap.
- The government introduced the Energy Bills Support Scheme to help people pay their energy bills through winter. Domestic customers will receive £400 in monthly instalments up 31 March 2023.
- To help further the government introduced the Energy Price Guarantee which would keep average annual bills to around £2,500 until 31 March 23 and then rise to £3,000 for a further 12 months. Businesses, charities and SME have a similar scheme called the Energy Bill Relief Scheme (EBRS).
- The National Grid launched its Demand Flexibility Service where customers are rewarded for reducing their energy consumption.
Rising bills help.We want to reassure you that we are dedicated to helping you where we can. We have put together some helpful resources where you can access support from us, charities and the government.
Feel the Community power.The E.ON Next Community is a space for customers just like you, sharing their experiences to offer a helping hand. Find support or suggest your own unique topics, plus get involved in discussions on all the latest news.
Blog updated 15/03/23