Protest as new price cap means Scots still face 42% energy bills rise

That is because under the UK government's Energy Price Guarantee (EPG) scheme, the average household dual fuel energy bills will rise to £3,000 a year between April and June up from the current £2,500.

The current support comes alongside a separate £400 discount which will no longer be available.

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The typical energy bill will now amount to around 10% of the average Scottish salary.

The energy market regulator Ofgem said the drop in the price cap represented a "significant reduction" in the cost of buying and providing energy for customers.

It said that if that continues, it will mean that by the summer, prices paid by consumers will drop for the first time since the global gas crisis took hold more than 18 months ago.

And consumer groups have warned that action needs to be taken as millions will still face "catastrophic" impacts from soaring bills.

Ofgem said that its quarterly cap on household bills for average dual-fuel direct-debit customers will fall by around 23% for the three months from April 1, from £4,279 for the January to March quarter.

Experts have warned that businesses could face charges of 70-80% more for energy from April 1, especially if their energy prices are not bought in advance in a practice known as hedging. Cornwall Insight said last week that such increases could have a “catastrophic” effect for many smaller businesses.

Dame Clare Moriarty, chief executive of Citizens Advice, said that households now face an "unsustainable" increase in energy costs from April.

Citizens Advice estimates that the number of people who cannot afford their energy bills will double, from one in 10 people to one in five.

And it is calling on the government not to allow bills to rise in April, and to keep the energy price guarantee at £2,500.

An increase of £900 per year on energy bills will drag "a very large number of people" into bill payment problems, Ms Moriarty has warned.

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She said: "We know that is going to be unsustainable for very many people.

"We are talking about literally millions of people who are going to see catastrophic impacts."

Rocio Concha, director of policy and advocacy with the consumer organisation Which warned that the continuing increase will be especially difficult for pre-payment meter customers – who are more likely to be on lower incomes – as they can’t spread these increased costs out evenly over the coming year.

“In the absence of an effective means to target support, the best thing the government can do to support people is to postpone increasing the energy price guarantee to £3,000. For some families, who continue to be battered by high inflation, this will offer an important lifeline to stop them from falling into financial distress," she said.

The Resolution Foundation think tank said families will feel the hit unless the Chancellor Jeremy Hunt heeds calls to stop the rise in the EPG.

“The latest Ofgem price cap is a stark reminder of the lag between falling wholesale gas prices, and falling household energy bills," said Resolution Foundation economist Emily Fry.

“While consumers won’t have to face typical bills of £3,280 this spring, many are still set to see bills rise by a fifth as government support is scaled back.

“The Chancellor should prevent this coming energy bills spike by maintaining the level of the EPG at £2,500 for a further three months.”

Trades Union Congress general secretary Paul Nowak said bills were "out of control" and that the government "must cancel" the April hike.

 “Families across Britain are at breaking point. Prices are skyrocketing, but wages are failing to keep pace with the cost of living," he said.

The energy price cap was introduced by the government and has been in place since January 2019, and Ofgem is required to regularly review the level at which it is set.

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It ensures that an energy supplier can recoup its efficient costs while making sure customers do not pay a higher amount for their energy than they should. The price cap, as set out in law, does this by setting a maximum that suppliers can charge per unit of energy.

Before the UK government stepped in, the upward curve of energy price rises began in April, last year when 1.5m Scots households saw their energy bills soar by up to £693 a year after the energy market regulator Ofgem hiked the price cap by the biggest increase yet.

It meant that three in four customers on default tariffs paying by direct debit saw an increase of £694 from £1,277 to £1971 while the rest who are on prepayment meters - and tend to be among the most vulnerable - saw a rise of £708 from £1,309 to £2017.

The impending rise in household energy bills comes as European natural gas prices fell toward an 18-month low

Gas prices have slumped about 35% this year after hitting record highs in August following Russia's invasion of Ukraine early last year.

Prices are below their level before the war began, although they remain above their historical average.

A Department for Energy Security and Net Zero spokesperson said:  "Government support will continue to help households with their energy bills.

"We know this is a difficult time for families, which is why the Government has covered around half of the typical household's energy bill this winter, and by the end of June the Energy Price Guarantee will have saved a typical household in Great Britain around £1,000 since it began in October. 

"In the meantime, we're committed to helping people with rising costs by reducing inflation and growing the economy.  

"The cost of energy has already been falling and we expect this to drop further over the coming months, which we fully expect suppliers to pass onto their customers."