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What is the energy price cap and why are bills going up so much? What is the energy price cap and how high will bills go?
(4 days later)
Typical household energy bills are likely to rise above £3,000 a year this winter, industry sources have warned BBC News. This winter's increase in energy bills will be even sharper than predicted, according to the head of the regulator Ofgem.
This is more than the watchdog, Ofgem, was predicting when the government announced a support package to help offset soaring prices. The lower estimate was used by ministers when deciding how much financial support to offer households.
All UK households will receive a £400 discount on their fuel bills, while people on benefits will get an additional £650. How high are bills going to go?
When will I get the £400 and how will it be paid? In May, Ofgem chief executive Jonathan Brearley said a typical household would pay £2,800 a year - an increase of £800 - from October.
All households in England, Wales and Scotland will be given a one-off £400 discount on their fuel bills in October. October is when the energy price cap - the maximum price set by Ofgem which suppliers can charge customers in England, Scotland and Wales - is next up for review.
This replaces a previous plan to take £200 off bills, which would have had to be repaid over five years. But Mr Brearley has now told MPs it is "clear" that "prices are looking higher than they did when we made that estimate".
Direct debit and credit customers will have the money added to their account balance. He wouldn't be drawn on exactly how much prices will increase.
Pre-payment customers will have the discount applied to their meter or receive it via a voucher. But one industry analyst has predicted a rise of more than £1,200 a year in October. Cornwall Insight said that the typical domestic customer was likely to pay £3,244 a year from October, then £3,363 a year from January.
The government says customers in Northern Ireland - which has a separate energy market - will also get the money, although it is not yet clear how. The typical bill at present is about £2,000 a year, after the last price cap increase in April 2022. This is already £600 more than the average bill was in October 2021.
The payments will be partly funded by a temporary 25% tax on oil and gas companies' profits.
Who will get the £650 payment?
A £650 payment will be made to more than eight million low-income households who receive Universal Credit, tax credits, pension credit and other means-tested benefits.
For many people it will be paid into bank accounts in two instalments - in July and the autumn.
Payments for those who only receive tax credits will follow shortly afterwards.
What other help is there?
Disabled people will receive £150 (plus the £650 payment if they also qualify for that).
Pensioner households who receive the winter fuel payment will get £300.
So in theory, a low-income pensioner who has a disability could get £1,500.
How fast are energy bills rising?
The maximum price which suppliers can charge customers in England, Scotland and Wales is called the energy price cap.
At the beginning of April, the price cap for a typical household rose by £700 from £1,277 to £1,971 per year. For pre-payment customers it increased from £1,309 to £2,017. How much you actually pay depends on how much energy you use.
Bills are expected to rise even further.
In May, Ofgem - which sets the price cap - said it could rise to about £2,800 from October, when it is next updated.
But BBC News has seen industry calculations suggesting typical households could in fact see bills above £3,000, however they pay.
The government said it did not recognise these latest figures but added it and Ofgem "keep a close watch on energy prices".
Why is the energy price cap rising so much?Why is the energy price cap rising so much?
The energy price cap is designed to protect consumers from short-term changes in prices. It is adjusted every six months (although Ofgem wants to reduce the gap to three months).The energy price cap is designed to protect consumers from short-term changes in prices. It is adjusted every six months (although Ofgem wants to reduce the gap to three months).
The cap is based on the price energy suppliers pay producers for electricity and gas. The level is based on the price energy suppliers pay producers for electricity and gas.
This has risen sharply because demand for gas increased as the Covid pandemic eased, and because the war in Ukraine has threatened supplies from Russia.This has risen sharply because demand for gas increased as the Covid pandemic eased, and because the war in Ukraine has threatened supplies from Russia.
The price cap doesn't apply in Northern Ireland, but households there have also seen bills rise.The price cap doesn't apply in Northern Ireland, but households there have also seen bills rise.
What's been the effect on customers?What's been the effect on customers?
There have been warnings that UK households are facing a "cost of living catastrophe".There have been warnings that UK households are facing a "cost of living catastrophe".
Fuel costs are one of the main factors which have driven the UK inflation rate up to 9% - its highest for 40 years.Fuel costs are one of the main factors which have driven the UK inflation rate up to 9% - its highest for 40 years.
Many people are expected to face "fuel poverty" - when a household has to spend a high proportion of its income on energy bills.Many people are expected to face "fuel poverty" - when a household has to spend a high proportion of its income on energy bills.
According to the National Energy Action (NEA) charity: "Millions will simply not be able to heat their homes [this winter]. We will see serious ill health and early deaths for those most susceptible to the cold." According to the National Energy Action (NEA) charity: "Millions will simply not be able to heat their homes [this winter]. We will see serious ill-health and early deaths for those most susceptible to the cold."
What help am I getting to pay my energy bills?
All households in England, Wales and Scotland will be given a one-off £400 discount on their fuel bills in October.
The government says customers in Northern Ireland - which has a separate energy market - will also get the money, although it is not yet clear how.
In addition, a £650 payment will be made to more than eight million low-income households who receive Universal Credit, tax credits, pension credit and other means-tested benefits.
Disabled people will also receive £150 (plus the £650 payment if they also qualify for that).
And pensioner households who receive the winter fuel payment will get £300.
So in theory, a low-income pensioner who has a disability could get £1,500.
How do I get the £400 energy grant and £650 cost-of-living payment?
What other help is available?What other help is available?
The government is doubling the Household Support Fund to £500m. This money is given to local authorities in England to support vulnerable families.The government is doubling the Household Support Fund to £500m. This money is given to local authorities in England to support vulnerable families.
Households in England have already been 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. Households in England whose homes are in bands A-D should have already been given a £150 council tax rebate to cope with the rise in fuel prices. Similar schemes are in place in Wales and Scotland.
However, the NEA told BBC News some of the poorest households in England and Wales had struggled to access the rebate.
English councils also have access to a "discretionary fund" to make extra payments, including to people living in other council tax bands.English councils also have access to a "discretionary fund" to make extra payments, including to people living in other council tax bands.
In Northern Ireland the government has been given money to make payments, but political uncertainty there has meant the cash hasn't yet been released.In Northern Ireland the government has been given money to make payments, but political uncertainty there has meant the cash hasn't yet been released.
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.
All the big energy firms have hardship funds, and customers can also get advice from organisations including the NEA, Citizens Advice, Turn2Us or the StepChange debt charity.All the big energy firms have hardship funds, and customers can also get advice from organisations including the NEA, Citizens Advice, Turn2Us or the StepChange debt charity.
What can I do to save on fuel costs?What can I do to save on fuel costs?
Fuel providers are currently not generally trying to tempt new customers with cheap offers. Most people who are already on fixed deals are advised to stay put.Fuel providers are currently not generally trying to tempt new customers with cheap offers. Most people who are already on fixed deals are advised to stay put.
Otherwise, households are being encouraged to save money by improving energy efficiency.Otherwise, households are being encouraged to save money by improving energy efficiency.
The Energy Saving Trust says several small changes could help offset some of the rising energy costs.The Energy Saving Trust says several small changes could help offset some of the rising energy costs.