By Susanna Twidale Feb 25 (Reuters) - Most British households will have lower energy bills from April, energy regulator Ofgem said on Wednesday, as it announced a 7% cut in its price cap under
UK Energy Bills to Decrease as Ofgem Lowers Price Cap
By Susanna Twidale
Feb 25 (Reuters) - Most British households will see lower energy bills from April, energy regulator Ofgem said on Wednesday after cutting its price cap by 7% under government measures to ease costs.
Government Policy Changes and Their Impact
The move follows plans set out in last year's budget to shift some renewable energy costs to general taxation and scrap a scheme requiring suppliers to fund measures such as insulation for low-income households.
“The main driver of today’s reduction is the change to policy costs announced by the Chancellor in the budget,” Tim Jarvis, Director General, Markets, at Ofgem said.
The new cap of 1,641 pounds ($2,218.96) a year for average electricity and gas use is 117 pounds lower than the level set for January to March.
Renewable Energy Costs and Consumer Bills
The government said last year it would shift 75% of the cost of the Renewables Obligation, which funds renewable power generation, from consumer bills to general taxation from April.
It also said it would scrap a scheme requiring energy companies to fund measures such as insulation and new heating systems for low-income households.
The two measures would remove around 150 pounds a year from average household bills, it added.
Rising Network Costs and Their Effects
However, soaring network costs have offset some of those savings.
Wholesale gas and power prices are a major part of the formula Ofgem uses to calculate the price cap and these fell over the past few months, but network costs are becoming a larger part of the bill as the network is upgraded.
Network costs rose by 66 pounds compared with the last price cap period as levies associated with a 24 billion pound upgrade to the country's energy transmission system started to be added.
The price cap on standard tariffs was introduced in 2019 and currently covers around two thirds of households.
($1 = 0.7395 pounds)
(Reporting by Susanna Twidale in London, Aatrayee Chatterjee in Bengaluru; Editing by Rashmi Aich, Andrew Heavens and Nivedita Bhattacharjee)
