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What is the energy cap and why are energy bills so high? What is the energy cap and why are energy bills so high?
(about 1 month later)
Millions of households in England, Scotland and Wales could be paying about £700 a year more for electricity and gas, following a price rise this month. There are calls for more action from the government to help people pay their energy bills ahead of another expected price rise in October.
Energy experts have encouraged customers to take and submit meter readings as the changes take effect, in an attempt to save cash. The boss of one energy company, Scottish Power, has warned that millions of customers face an "horrific" winter without a major government intervention.
The government has announced a new energy strategy, thought this is not a plan to cushion householders from rising energy prices, but an attempt to increase the UK's resilience to future energy shocks. Why are my energy bills so high?
How much will my energy bill go up? Last month's sudden increase in bills was a result of the lifting of the energy price cap, which is the maximum price suppliers in England, Wales and Scotland can charge households.
From 1 April, about 18 million households on standard tariffs will see an average increase of £693 - from £1,277 to £1,971 per year. This led to an average increase of £693 for about 18 million households on standard tariffs - and £708 for 4.5 million prepayment customers.
Some 4.5 million prepayment customers will see an average increase of £708 - from £1,309 to £2,017. Energy companies have seen the wholesale prices they pay affected by the war in Ukraine and ongoing pressure on suppliers.
The amount your bill will go up depends on how much energy you use. The cap is designed to protect domestic customers from the volatility of wholesale energy prices.
Energy bills won't rise immediately for customers on fixed rates, but many are likely to see a significant increase when their deal ends. It does not apply in Northern Ireland, but households there are also facing increasing bills.
Ofgem: Check if the energy price cap affects you Northern Ireland: Why are energy bills going up?
What's in the UK's new energy strategy? Energy firms ordered to explain direct debit hikes
Will the UK's energy strategy work? Will they go up again?
Why are bills going up? It seems likely that prices will increase yet again in October, the next time the price cap - which is set every six months - is due to be reviewed.
Bills are going up because the energy price cap - the maximum price suppliers in England, Wales and Scotland can charge households - is being raised. Last month, energy consultancy Cornwall Insight warned this could add another £629 per year to a typical bill. This would push annual energy bills for a household using a typical amount of gas and electricity to up to £2,600 from October.
Energy firms have been able to increase bills by 54% following the introduction of the new cap on 1 April. Keith Anderson, the chief executive of Scottish Power, has warned that about 40% of UK households could be in fuel poverty this winter. Fuel poverty generally means a household that spends a high proportion of its income heating the home.
The price cap is reviewed every six months, and prices are expected to rise yet again in October. Mr Anderson told the BBC that a government intervention was needed to both protect bill-payers and prevent energy companies from collapsing because their customers couldn't pay their bills.
A report by the bank Investec has warned bills could reach £3,000 a year. What help is available?
Why might I need to read my gas and electricity meters? Households in England are being given a £150 council tax rebate to cope with the rise in fuel prices, if their homes are in bands A-D. Similar schemes are in place in Wales and Scotland. Councils also have access to a "discretionary fund" for extra payments, including to people living in other council tax bands.
Experts encouraged people without smart meters to submit gas and electricity meter readings on 31 March. In Northern Ireland, where there is no council tax system, the government has been given money to make payments but political uncertainty has meant the cash has not yet been released.
This was to ensure that they had logged the use of less expensive rates for energy before the changes took place on 1 April. Confusion over council tax rebate timing
Energy companies' phone lines, websites and apps were very busy, and several crashed as a result. Poorest could miss out on £150 council tax rebate
Greg Jackson, chief executive of Octopus Energy, told the BBC that the company was receiving about 40,000 meter readings an hour at one point on Thursday. But he urged people not to panic about submitting a reading before the 1 April deadline. What can be done to help with energy costs in NI?
"I think with most companies, certainly with Octopus, you can give it any time in the next week and... we'll apply it to the day when you took it," he told the BBC's World at One programme. Under a separate scheme, in October customers in England, Scotland and Wales will receive a £200 rebate on their energy bills, which they will have to repay at £40 a year for five years, starting in April 2023.
Mr Jackson added that he was "pretty sure that'll apply universally", with EDF and E.On having said they would do the same. Eligibility is also being expanded for the Warm Home Discount, which offers low income households a £150 one-off annual discount on their electricity bill between October and March.
If you can't submit your readings, you should take a photo with the meter reading and meter serial number both clearly visible to submit at a later date. People struggling to afford energy bills can seek advice from charities such as Citizens Advice, Turn2Us or the StepChange debt charity.
It's worth noting too that logging an extra reading to give a more accurate picture of your energy usage could see your bills go up if it is more than your company had forecast. All the big energy firms also have hardship funds that can offer assistance if someone is struggling to pay.
How do energy prices affect the cost of living?How do energy prices affect the cost of living?
More households are expected to struggle because of bill increases.
The Resolution Foundation think tank expects the number of homes facing "fuel stress" across the UK to treble to 6.3 million, and says pensioners and people in local authority housing will be hit hardest.The Resolution Foundation think tank expects the number of homes facing "fuel stress" across the UK to treble to 6.3 million, and says pensioners and people in local authority housing will be hit hardest.
It warns UK households are facing a "cost of living catastrophe".It warns UK households are facing a "cost of living catastrophe".
Food prices are also rising, and an increase in National Insurance in April will leave millions facing higher tax bills. Food prices are also rising, and an increase in National Insurance in April left millions facing higher tax bills.
The Bank of England has put up interest rates for the third time in four months to try to slow price rises, but it has warned that inflation, which tracks how quickly the cost of living changes over time, could hit double-digits later in the year. The Bank of England has put up interest rates to their highest level for 13 years to try to slow price rises, but it has warned that inflation, which tracks how quickly the cost of living changes over time, would be over 10% by the end of the year.
Why are prices rising so quickly?Why are prices rising so quickly?
Four things that are going up in price and whyFour things that are going up in price and why
What are interest rates and why do they matter?What are interest rates and why do they matter?
Why have gas prices gone up?
A worldwide squeeze on energy supplies pushed the price of gas up last year.
But wholesale prices have risen even higher since the invasion of Ukraine by Russia, which is the world's largest natural gas exporter
The UK gets little of its gas from Russia directly, but prices could still be driven up worldwide if Russian supplies to Europe were affected.
Warning UK energy bills could top £3,000 a year
What can I do to save on fuel?What can I do to save on fuel?
In the past, consumers have been encouraged to shop around when bills rise.In the past, consumers have been encouraged to shop around when bills rise.
But at the moment better offers - especially fixed deals - are not available. People already on fixed deals are advised to stay put.But at the moment better offers - especially fixed deals - are not available. People already on fixed deals are advised to stay put.
Otherwise, households are being encouraged to improve the energy efficiency of their homes.Otherwise, households are being encouraged to improve the energy efficiency of their homes.
The Energy Saving Trust says several small changes to our homes and habits could help many people off-set the rise in energy costs by about a third.The Energy Saving Trust says several small changes to our homes and habits could help many people off-set the rise in energy costs by about a third.
What other help is available?
People struggling to afford energy bills can seek advice from charities such as Citizens Advice, Turn2Us or the StepChange debt charity.
All the big energy firms also have hardship funds that can offer assistance if someone is struggling to pay.
The government has said it will offer extra help worth a total of £350 via the council tax system in England too.
The warm house discount scheme will also be expanded to cover three million households. It offers low income households a one-off annual discount on their electricity bill, and was worth £140 in 2021-22.
In October customers in England, Scotland and Wales will receive a £200 rebate on their energy bills. They will have to repay this at £40 a year for five years, starting in April 2023.
The Northern Ireland energy market is separate, but the government has said £150m would be available to support households.