Jeremy Hunt urges households to slash energy use

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Regulator Ofgem announced the price cap would increase to 67p per unit for electricity and 17p for gas from January. This would usually see the typical household bill rise to £4,279 a year.

But Ofgem’s announcement will not impact the amount people pay for their energy because the government has said electricity will cost 34p per unit and gas will be 10.3p until April.

The hike means the cost of running the Government’s energy price guarantee will rise from £7.8 billion in the last three months of 2022 to £15.1 billion in the first three months of next year, estimates by energy consultancy Auxilione.

Introduced on 1 October, the guarantee limits how much the typical household pays for its wholesale energy, taking the average annual bill to £2,500.

The latest government cap will be in place until April next year, when the threshold is raised to £3,000.

Rocio Concha, director of policy and advocacy at Which?, said: “The news that the energy price cap will hit £4,279 from January will be hugely worrying for consumers but they should remember that their bills are protected against this price increase by the Government’s energy price guarantee scheme.”

As gas prices soared in the last two years, the cap has had to rise from a little over £1,100 just 14 months ago to the record-setting amount due to be implemented from January.

Vladimir Putin’s war in Ukraine has led to rocketing prices for energy amid surging inflation.

Ministers are set to launch a public information campaign that will direct people towards “authoritative sources of advice” on managing energy usage and saving money.

Levelling up Secretary Michael Gove insisted it will not be “nannying or patronising”.

The scheme could show households how to knock up to £420 off their bills.

Mr Gove said: “What we will be doing and should be doing is pointing people towards authoritative sources of advice on how to minimise energy usage but it’s important that advice comes from experts and that there’s nothing nannying, or patronising, or directional about it from people like me.”

People could be given money-saving tips such as reducing the flow temperature from boilers, switching electrical devices off rather than leaving them on standby and changing from baths to showers.

Initial reports suggested it would cost £25 million but insiders have slammed the suggestion and insisted it would be significantly less.

Chancellor Jeremy Hunt told MPs on Wednesday that “for most people we need you to play your part in reducing our energy dependency” and “we’ve got this national ambition to reduce energy consumption by 15 per cent”.

A previous attempt to introduce a public information campaign on energy-saving measures was reportedly blocked under Liz Truss’s administration.

Energy consultancy Cornwall Insight said the hike in Ofgem’s cap on energy bills will be “concerning” for the Government.

Craig Lowrey, a principal consultant at the analysis firm, said the Treasury will be ”shouldering the billions of pounds needed to compensate suppliers the difference.”

The Government’s Energy Price Guarantee will help reduce Consumer Price index (CPI) in the short-term as people pay less on their bills.

But in the longer-term, the scheme will provide more financial support for household incomes and demand, encouraging people to spend and therefore pushing up inflation

The UK’s CPI inflation rate reached 11.1 per cent in October as soaring food and energy prices drove up average living costs.

The Chancellor’s autumn statement last week is expected to help bring down inflation in the long-term as a result of tax measures that will limit households’ ability to spend.

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