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Saturday, Jul 05, 2025

Cost of living: Energy bills for an average household could hit £4,347 a year from April, analysts warn, as universal price guarantee to end

Cost of living: Energy bills for an average household could hit £4,347 a year from April, analysts warn, as universal price guarantee to end

New chancellor Jeremy Hunt said the universal energy price guarantee will finish next April, with a review being launched on how to then support bills after this period.

Annual energy bills could reach £4,347 for an average household after the government announced the two-year price freeze will now run for just six months.

New chancellor Jeremy Hunt said the universal energy price guarantee will finish next April, with a review being launched on how to then support bills after this period.

The government said its changed approach after April will "cost the taxpayer significantly less than planned" and will target those most in need of support.

It also confirmed that the energy bill relief scheme for businesses, which will cap corporate energy bills, is also set to end in April.

Following Mr Hunt's announcement as part of the mini-budget U-turns, energy market analysts Cornwall Insight said a typical household could face bills of £4,347 a year.

Liz Truss's government had launched the support scheme at the start of last month to limit the unit cost of energy so that a typical household will pay a maximum of £2,500 annually.

Energy regulator Ofgem previously had raised the cap to £3,549 from October, necessitating a government intervention that came in the form of the energy price guarantee.

The rise came as the cost of wholesale gas soared following Russia's invasion of Ukraine.


The price cap raise resulted in a typical default tariff customer paying an extra £1,578, before the price guarantee measure took effect.

The October price cap rise followed a 54% increase in April, which saw average bills surge to £1,971 a year.

But the price guarantee had meant the cost of bills would not rise above £2,500 annually.

It was always important to review the universal nature of the energy price guarantee, Cornwall Insight said.

Targeted schemes to help those most in need of support, along with energy efficiency measures, need to be taken, the analysts said.

"Now constructive attention needs to turn to what a replacement scheme looks like from April to ensure that those who need support receive it, and that whatever options are taken forward can form the foundation stones of an enduring, fair and sustainable market after the current crisis subsides."

The move has been criticised as creating uncertainty for households, however.

National Energy Action said ending the energy guarantee after six months is an "almighty trade-off" and has created "huge uncertainty".

Questions on who will continue to receive supports and in what amounts need to be answered quickly, the National Energy Action chief executive Adam Scorer said.

"Many vulnerable people were holding on by their fingertips. Government has to be very, very careful it doesn't prise them away."

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