The government is set to extend UK energy bill support.

According to a source familiar with the situation, UK Chancellor of the Exchequer Jeremy Hunt plans to shield Brits from rising costs by keeping the government's energy price guarantee at £2,500 for an additional three months.

On the condition of anonymity, the individual said that Hunt has urged energy firms to prepare for the extension. Without extending the guarantee, which caps the amount an ordinary household would have to spend on energy each year, costs would increase by 20% on average starting on April the 1st.

On April 1, the EPG was scheduled to increase to £3,000, and Hunt has previously opposed demands to reverse direction. He stated in February that the Treasury couldn't afford such a move. He has since been under intense pressure to take action from consumer advocacy organisations and charities in response to fears that more people would be forced into fuel poverty.

Economists anticipate that Hunt will have an additional £10 billion to work with when he presents his spring budget on March 15 as a result of higher-than-anticipated tax collections and lower wholesale energy costs. Treasury officials issue a warning, noting that Hunt has little space for manoeuvring and that the budgetary situation is still fragile.

According to consulting firm Cornwall Insight, raising the EPG to £3,000 would have resulted in a £2.5 billion savings for the government.

A mild winter has reduced electricity and gas usage, reducing the strain on Britain's budget after gas prices climbed to record highs in 2022. Investec Plc predicts that the cost of the government's assistance programme will drop from £25 billion during the current fiscal year to £3 billion in the following fiscal year.

The UK's energy regulator, Ofgem, has set a ceiling on average household energy costs. The ceiling was raised to £4,279 in January of this year due to sharp increases in energy prices. On April 1st, it is expected to decrease to £3,280, which is still more than the government's Energy Price Promise.

The government protects consumers by making up the difference when the price ceiling is greater than the EPG, which is the situation at the moment. According to Cornwall Insight, the price ceiling set by Ofgem will fall to £2,153 in July, below the government's subsidy threshold.

The programmes the government is/has implemented to aid households in managing the current cost-of-living crisis:

• Energy unit prices for families on variable tariffs or higher fixed tariffs are essentially capped by the government's Energy Price Guarantee.
• Every household in Great Britain received a £400 reduction in their energy costs as part of the Energy Bills Support Scheme from October 2022 to March 2023.
• Extra energy payments for disadvantaged groups

(Bloomberg.com, Which.co.uk, Cornwallinsights.co.uk)