UK energy firms must pass on price savings to customers, ministers warn

Ministers have warned energy firms that they must pass on the benefits of lower wholesale prices to consumers, amid concern that bills could rise this spring.

In a speech on Wednesday, Grant Shapps will tell energy suppliers that reduced wholesale prices must be seen in consumer prices, “no ifs, buts or maybes”.

In an apparent sign of government concern about the impact of reduced direct support for domestic energy bills, the energy secretary will spell out his message in a speech at the Chatham House thinktank in London.

“I have one overriding mission in this new job: for the UK to have amongst the cheapest wholesale electricity prices in Europe,” said Shapps, whose formal brief changed from being business and energy secretary to energy security and net –
zero secretary amid a mini-reshuffle and restructuring earlier in February.

“This is critical to consumers, to our country and to our planet,” he added. “Making the most of our position as a world-leaders in renewables and nuclear technology, homegrown sources that will shield households from the worst excesses of the volatile global fossil-fuel markets. And suppliers must be ready to pass those savings on to consumers.”

Ministers face pressure to postpone the reduction in support for consumer energy bills due in April, given the impact on cost of living pressures.

On Monday, the energy regulator, Ofgem, said its energy cap – the amount suppliers can charge for average dual fuel, direct debit customers – would fall by 23% for the three months from 1 April to £3,280, from £4,279 for the January to March quarter.

However, the reduction in government help means that the actual price paid by an average household will rise from £2,100 a year in April to £3,000.

Wholesale gas prices have fallen sharply in recent months but the drop is yet to feed through into household bills because suppliers buy their energy months in advance.

Shapps’ speech, extracts of which were released in advance by his department, will also focus on wider energy security issues, with a pledge that “never again should [Vladimir] Putin or anyone like him even think they can hold the UK to ransom”.

The government has promised to invest heavily in domestic-based energy sources, including nuclear power, renewables and some continued fossil fuel extraction.

The latter has prompted protest groups to vow to obstruct this, with Shapps due to also promise action to tackle them.

“Families have seen the impact on the pounds in their pockets of Putin’s illegal march on Ukraine a year ago – and it has opened the world’s eyes to just how vulnerable we are to tyrants like him,” he will say.

“Working towards this overarching goal of cheaper wholesale electricity will mean we will be powering Britain from Britain, increasing our energy security and independence – the kind of independence that comes from having the four biggest windfarms off our shores.

“And all this will be better for our planet – energy security and tackling climate change are ultimately two sides of the same coin. And it will be this – not the eco-extremists like Extinction Rebellion causing disruption and dismay – that will have people voting with their feet as they see the benefits of achieving net zero.”