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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 5 hours later)
There are calls for more action from the government to help people pay their energy bills ahead of another expected price rise in October. There are calls for more government action to help people pay their energy bills ahead of another expected price rise in October.
The boss of one energy company, Scottish Power, has warned that millions of customers face an "horrific" winter without a major government intervention.The boss of one energy company, Scottish Power, has warned that millions of customers face an "horrific" winter without a major government intervention.
Why are my energy bills so high? Why are bills so high?
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. Bills rose for millions of families in April because of an increase in the energy price cap, which is the maximum price that suppliers in England, Wales and Scotland can charge households.
This led to an average increase of £693 for about 18 million households on standard tariffs - and £708 for 4.5 million prepayment customers. This meant an average increase of £693 for around 18 million households on standard tariffs - and £708 for 4.5 million prepayment customers.
Energy companies have seen the wholesale prices they pay affected by the war in Ukraine and ongoing pressure on suppliers. Energy companies have seen the wholesale prices they pay affected by the war in Ukraine and continuing pressure on gas supplies.
The cap is designed to protect domestic customers from the volatility of wholesale energy prices.The cap is designed to protect domestic customers from the volatility of wholesale energy prices.
It does not apply in Northern Ireland, but households there are also facing increasing bills. It doesn't apply in Northern Ireland, but households there are also seeing bills rise.
Northern Ireland: Why are energy bills going up?
Energy firms ordered to explain direct debit hikesEnergy firms ordered to explain direct debit hikes
Will they go up again?Will they go up again?
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. The boss of energy regulator Ofgem, Jonathan Brearly, said bills are likely to increase again in October when the price cap is next reviewed, as a result of volatility in the wholesale markets.
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. In April, analysts Cornwall Insight estimated typical bills could go up by another £629 per year. This would push annual energy bills for an average household to £2,600.
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. Keith Anderson, the chief executive of Scottish Power, warned that about 40% of UK households could be in fuel poverty this winter. Fuel poverty means a household spends a high proportion of its income on energy bills.
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. Mr Anderson told the BBC that government intervention was necessary to protect billpayers and prevent energy companies from collapsing because their customers couldn't pay their bills.
What help is available?What help is available?
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. 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.
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. English councils also have access to a "discretionary fund" for extra payments, including to people living in other council tax bands.
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 hasn't yet been released.
Confusion over council tax rebate timingConfusion over council tax rebate timing
Poorest could miss out on £150 council tax rebatePoorest could miss out on £150 council tax rebate
What can be done to help with energy costs in NI? 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, from April 2023.
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.
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.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.
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 have hardship funds, and customers can also get advice from organisations 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.
How do energy prices affect the cost of living?How do energy prices affect the cost of living?
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 has warned that UK households are facing a "cost of living catastrophe".
It warns UK households are facing a "cost of living catastrophe". Prices are rising by 7% a year in the UK - the highest rate for 30 years - partly as a result of rising fuel and food costs. A National Insurance increase in April also left 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 to their highest level for 13 years to try to slow price rises, but has warned that inflation could be over 10% by the end of 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 can I do to save on fuel costs?
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. However, at the moment, better offers - especially fixed deals - are not available to new customers.
Otherwise, households are being encouraged to improve the energy efficiency of their homes. People already on fixed deals are advised to stay put. A few firms, including British Gas and EDF, are offering new fixed price deals to some existing customers, which may be worth considering.
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. Otherwise, households are being encouraged to save money by improving energy efficiency.
The Energy Saving Trust says several small changes could help many people off-set some of the recent rises in energy costs.