Will your energy bill go up next month or not? Here's what we know

Confused by what's going to happen to your energy bill in April? We set out what could happen in the coming weeks

What's happening? The energy "price cap" - which is the maximum amount energy companies can charge customers - is set to fall by £1,000 in April.

Ofgem made the announcement earlier this week outlining that the cap - which normally dictates how big our energy bills are - will reduce from £4,279 to £3,280 from next month.

However, this doesn't actually mean energy bills are going to go down.

That's because the government is planning to reduce the amount of support it gives consumers via its Energy Price Guarantee.

The EPG was introduced by the government in October 2022 as a safeguarding measure in response to skyrocketing energy prices and capped a typical household bill at £2,500.

However, from April, the EPG is set to increase to £3,000.

Coupled with the fact that the £400 subsidy also being handed out by the government will shortly come to an end, households currently face an increase of around £900 a year on their bills.

Campaigners say the government can't allow this to happen and have urged Rishi Sunak and Jeremy Hunt to step in.

Confused? You're probably not alone. Yahoo breaks down what's going on, and whether the government is set to change its mind on the EPG.

What's the government's position?

The government is currently committed to raising its Energy Price Guarantee to £3,000 from April, after keeping the cap lower during the winter months.

However, rumours abound that chancellor Jeremy Hunt is mulling a U-turn on the issue, and will keep the cap at its current £2,500 until July.

He has been widely encouraged to extend the subsidy by energy and finance campaigners - who point to the recent drop in wholesale energy prices as evidence that the government should prevent further hikes for consumers.

Indeed, prime minister Rishi Sunak recently pledged to "keep on supporting people", while energy secretary Grant Shapps said he was "very sympathetic" to demands to extend the subsidy.

British Prime Minister Rishi Sunak walks on Downing Street in London, Britain March 1, 2023. REUTERS/Peter Nicholls
The government is understood to be reviewing the subsidy. (Reuters)

Minister for energy security and net zero Graham Stuart told BBC's Question Time this week that energy companies had to buy ahead and the drop had not yet been priced in, but did add: "We have said we will keep it under review to make sure we keep doing the right thing to protect people, we've done so during this winter and I expect us to do so going forward." The Times and BBC have also reported that an increase in support is imminent.

What the experts have said

The plan to hike the energy subsidy has been widely criticised by experts, with financial journalist Martin Lewis telling BBC Radio 4 on Friday there was a "better than 50% chance" the Energy Price Guarantee would not rise to £3,000 as previously planned.

"I wouldn't say it's a done deal. I wrote a letter to the chancellor three weeks ago ... saying don't do this its not good for individuals to put prices up, it's not good for people's mental health, it's not good for consumer confidence which means it's bad for business," he said. "It would also keep the inflation rate down if we don't put prices up - it's a bit of a no brainer."

The potential upside for consumers is that the energy price cap is falling, and if wholesale energy prices continue to drop, there will be an eventual decrease in energy bills.

However, independent energy research and analytics firm Cornwall Insight warned: "If the government goes ahead with its proposed plans to raise the EPG limit from an average £2,500 to £3,000 a year from April, far from falling typical consumers could see their bills skyrocket by £500."

What should people now now?

The Energy watchdog Ofgem has told consumers they may fess less of a price burden from July onwards, with wholesale energy prices anticipated to continue falling.

In a blog post for Ofgem, its CEO Jonathan Brearley acknowledged "many families are already struggling at today’s high prices – a further rise will only exacerbate this".

He has also cautioned people that if wholesale prices continue to fall, consumers should think hard about the kind of energy deals they enter into if fixed rate deals sart returning to the market.

"If wholesale prices do remain lower, we may well see new fixed price energy deals return to the market," he said. "There are many reasons why people may choose these – including the stability and certainty they can bring for household budgets.

"I would encourage all customers to examine any offer carefully, and ensure they consider the potential for the price cap to fall later in the year."

He added anyone struggling to pay their bills should contact their supplier for help.