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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? |
(about 8 hours later) | |
UK households will find out how much their bills will increase when the new energy price cap is announced on Friday. | |
The average annual household bill for gas and electricity could reach £4,650 in January, when the cap is next reviewed, according to analysts Cornwall Insight. | |
However, plans to make energy cheaper for households who use less during peak times are expected in early September. | |
What is the energy price cap? | What is the energy price cap? |
The price cap is set by Ofgem, the energy regulator. It sets the maximum price that energy companies can charge households on a standard variable tariff for each unit of energy (kilowatt hour or KwH) they use. | |
It's based on how much the companies have to pay the firms which produce electricity and gas, and is now reviewed every three months. | |
Ofgem then calculates how much a household which uses the average amount of energy will have to pay over a 12-month period - assuming they pay by direct debt. | |
People who use comparatively more energy will pay more, while the bill will be cheaper for those who use less. | |
Customers who don't pay by direct debit or who use prepayment meters pay more for the energy they use. | |
The price cap applies in England, Scotland and Wales, and is designed to protect consumers from short-term changes. | |
Energy prices in Northern Ireland are controlled separately, but have also risen sharply. | |
How high might bills go? | How high might bills go? |
In April, Ofgem raised the price cap by an unprecedented 54% - meaning the average bill rose to £1,971 per year. | |
The average annual bill could go up to £3,554 when the price cap for October is announced, Cornwall Insight says. Last winter, the typical bill was £1,277. | |
It then expects the average bill to increase again in January, to £4,650, or £388 a month, compared to the current £164 a month. | |
However, Ofgem has urged people to treat predictions of future price cap levels with "extreme caution". | However, Ofgem has urged people to treat predictions of future price cap levels with "extreme caution". |
What's the plan to encourage off-peak use? | |
National Grid, which runs the UK's electricity system, plans to offer discounts to households which cut their electricity use at peak times. | |
Under its scheme, which is due to be announced in early September, households which avoid using items like tumble dryers, dishwashers and games consoles between 17:00 and 20:00 BST would get rebates for every kilowatt hour (kWh) of energy they save during this time. | |
However, it's thought only households with smart meters will qualify, and it can take a few weeks to get one installed. | |
The Energy Saving Trust says several small changes to energy habits could also help, such as limiting your shower time and air drying your clothes. | |
Why is the energy cap so high? | |
Energy prices rose sharply when lockdown was lifted and the economy returned to normal. | |
They have also increased because the war in Ukraine has reduced supplies of Russian gas. | |
Europe is getting 90% less gas from Russia than it was this time last year, according to David Fyfe, chief economist at Argus Media, which advises energy companies. | |
This has pushed up the price of gas across the continent, including the UK. | |
Gas and electricity producers raised their prices so rapidly that many energy suppliers collapsed. | |
Ofgem has been raising the price cap to try and ensure the remainder stay in business. | Ofgem has been raising the price cap to try and ensure the remainder stay in business. |
It says adjusting the price cap every three months, rather than every six months, will reduce instability. | |
What's the effect on customers? | What's the effect on customers? |
Fuel price rises are expected to pitch many people into fuel poverty. | Fuel price rises are expected to pitch many people into fuel poverty. |
Energy company E.on UK suggests one in eight households are currently struggling to pay their bills, and says 40% may be struggling by October. | Energy company E.on UK suggests one in eight households are currently struggling to pay their bills, and says 40% may be struggling by October. |
The NHS has warned that rising numbers of people will see their health worsen, unless the government takes further action to limit price rises. | |
The NHS Confederation said many people would have to choose between skipping meals or heating their homes. | |
What help will I get to pay my energy bills? | What help will I get to pay my energy bills? |
All UK households will be given a one-off £400 discount on their fuel bills in October. | All UK households will be given a one-off £400 discount on their fuel bills in October. |
In addition, £650 will be paid to more than eight million low-income households who receive benefits or tax credits. | |
There are further payments of £300 to pensioner households and £150 to individuals receiving disability benefits. | |
Vulnerable families can also claim help through the Household Support Fund, the Warm Home Discount scheme, and hardship funds run by energy companies. | Vulnerable families can also claim help through the Household Support Fund, the Warm Home Discount scheme, and hardship funds run by energy companies. |
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? |
Ofgem: Getting help if you can't afford your energy bills | |
What happens if I don't pay my energy bills? | What happens if I don't pay my energy bills? |
Your supplier must give you a chance to clear your debt through an agreed payment plan. | |
If you don't agree, you may be forced to move to a pre-payment meter. | |
In extreme cases, you might be threatened with disconnection. | In extreme cases, you might be threatened with disconnection. |
What can I do if I can't afford my energy bill? | What can I do if I can't afford my energy bill? |
How are you preparing for the rise in energy bills and cost of living? You can get in touch by emailing: haveyoursay@bbc.co.uk. | How are you preparing for the rise in energy bills and cost of living? You can get in touch by emailing: haveyoursay@bbc.co.uk. |
Please include a contact number if you are willing to speak to a BBC journalist. You can also get in touch in the following ways: | Please include a contact number if you are willing to speak to a BBC journalist. You can also get in touch in the following ways: |
WhatsApp: +44 7756 165803 | WhatsApp: +44 7756 165803 |
Tweet: @BBC_HaveYourSay | Tweet: @BBC_HaveYourSay |
Or fill out the form below | Or fill out the form below |
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