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What is the energy price cap and how high will bills go? | What is the energy price cap and how high will bills go? |
(17 days later) | |
Another sharp rise in energy bills is expected in October | |
It has led to fears about how people will cope with soaring costs. | |
How high are bills going to go? | How high are bills going to go? |
The energy price cap - the maximum amount suppliers can charge customers in England, Scotland and Wales - will go up in October. | |
In May, energy regulator Ofgem said the typical household should expect to see an £800 increase, to £2,800 a year. | |
However, it now says "prices are looking higher than they did when we made that estimate". | |
Energy industry analysts Cornwall Insight said the typical domestic customer was likely to pay £3,244 a year from October, then £3,363 a year from January. | |
Another analyst, management consultancy BFY, predicted a typical energy bill could hit £3,850 a year by January. | |
The average bill was £1,400 a year in October 2021. The last price cap increase, in April 2022, saw that rise to £2,000. | |
What is the energy price cap and why is it rising so much? | |
The energy price cap is designed to protect consumers from short-term price changes. | |
It is adjusted every six months and is based on the price energy suppliers pay producers for electricity and gas. | |
This has risen sharply because demand for gas increased when Covid restrictions eased, and because the war in Ukraine has threatened supplies from Russia. | |
How Russia is cutting off gas to Europe | |
Can the world cope without Russian oil and gas? | |
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 the effect on customers? | |
Fuel costs are one of the main reasons UK inflation - the rate at which prices increase - is over 9%. This is higher than at any point in the past 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. |
Consumer champion Martin Lewis said many people will be unable to cover the increase in bills. | |
According to the National Energy Action 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? | 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 will also get the money. | |
This will be applied in monthly instalments over six months, with a reduction of £66 in October and November, and £67 a month from December to March 2023. | |
Direct debit and credit customers will have the money credited to their account. Customers with pre-payment meters will have the money applied to their meter, or paid via a voucher. | |
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. | 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). | 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. | 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. | 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? | 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 whose homes are in bands A-D should have received a £150 council tax rebate to help cope with the rise in fuel prices. Similar schemes are in place in Wales and Scotland. | |
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 on fixed deals are advised to stay put. | |
Otherwise, households are being encouraged to improve energy efficiency. | |
The Energy Saving Trust says several small changes could help. |
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