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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 16 hours later)
Energy bills are set to rise sharply in October, when a new price cap takes effect. Energy bills will rise sharply in October, when the new price cap takes effect.
With calls for more help with costs growing, plans to reduce bills for households using less energy at peak times are expected soon. With calls for more help with costs growing, plans to reduce bills for households using less energy at peak times are also expected soon.
How high might bills go?How high might bills go?
A new price cap will be announced by Ofgem, the energy regulator, on Friday. A new price cap of £3,549 has been announced by Ofgem, the energy regulator - an 80% rise on the current cap.
It will determine how much 24 million households pay for their energy when it comes info force on 1 October. The cap comes into effect on 1 October and will determine how much 24 million households pay for their energy.
The typical bill for direct debit customers could rise to £3,554 a year, according to analysts Cornwall Insight. Analysts at Cornwall Insight have said to expect further increases in January, when the price cap is due to be updated again. They now predict the cap will rise to £5,386 a year.
It says further increases could take bills to an average of £4,650 a year from January, when the cap is next updated.
However, Ofgem says predictions of future price cap levels should be treated with "extreme caution".However, Ofgem says predictions of future price cap levels should be treated with "extreme caution".
What is the energy price cap?What is the energy price cap?
The price cap is the maximum amount companies can charge households for each unit of energy they use (the kilowatt hour or kWh on your bills).The price cap is the maximum amount companies can charge households for each unit of energy they use (the kilowatt hour or kWh on your bills).
It also limits what firms can charge customers for being connected to the grid, known as the standing charge.It also limits what firms can charge customers for being connected to the grid, known as the standing charge.
Ofgem sets it according to how much energy companies have to pay for the electricity and gas they supply to households.Ofgem sets it according to how much energy companies have to pay for the electricity and gas they supply to households.
It calculates the annual bill for a household using a typical amount of energy. Before Friday's announcement that was £1,971 a year, or £2,017 for the 4.5 million households with a pre-payment meter, which are covered by a separate cap.It calculates the annual bill for a household using a typical amount of energy. Before Friday's announcement that was £1,971 a year, or £2,017 for the 4.5 million households with a pre-payment meter, which are covered by a separate cap.
Now those bills will rise to £3,549 for the majority of households and £3,608 for those on pre-payment meters.
However, the amount individuals actually pay could be higher or lower, depending on how much energy they use.However, the amount individuals actually pay could be higher or lower, depending on how much energy they use.
Ofgem now sets the energy price cap every three months and it applies in England, Scotland and Wales. Ofgem sets the energy price cap every three months and it applies in England, Scotland and Wales.
Energy prices in Northern Ireland are controlled separately, but have also increased sharply.Energy prices in Northern Ireland are controlled separately, but have also increased sharply.
Ofgem: Check if the energy price cap affects youOfgem: Check if the energy price cap affects you
How can I save money on my energy bills?How can I save money on my energy bills?
Plans to offer discounts to households which use less electricity at peak times, are expected in early September from National Grid, which runs the UK's electricity system.Plans to offer discounts to households which use less electricity at peak times, are expected in early September from National Grid, which runs the UK's electricity system.
Customers who don't use energy-hungry appliances between 17:00 and 20:00 BST would get money back for the energy they save during this time. Customers who don't use energy-hungry appliances between 17:00 and 20:00 BST could get money back for the 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.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 making several small changes to energy habits can also help reduce bills, such as limiting your shower time and air drying your clothes.The Energy Saving Trust says making several small changes to energy habits can also help reduce bills, such as limiting your shower time and air drying your clothes.
According to the Centre for Sustainable Energy, tumble dryers use between 2 and 3 kWh per hour they're on, while ovens use about 2 kWh and dishwashers between 1 and 1.5 kWh.According to the Centre for Sustainable Energy, tumble dryers use between 2 and 3 kWh per hour they're on, while ovens use about 2 kWh and dishwashers between 1 and 1.5 kWh.
Boosting your home's insulation can also cut bills. Improving your home's insulation can also cut bills.
Why are energy prices so high?Why are energy prices so high?
Energy prices rose sharply when lockdown lifted and the economy began to return to normal.Energy prices rose sharply when lockdown lifted and the economy began to return to normal.
They have also increased because the war in Ukraine has sharply reduced supplies of Russian gas.They have also increased because the war in Ukraine has sharply reduced supplies of Russian gas.
This has pushed up the price of gas across the continent, including in the UK.This has pushed up the price of gas across the continent, including in the UK.
Gas and electricity producers raised their prices so rapidly in 2021 that many energy suppliers collapsed.Gas and electricity producers raised their prices so rapidly in 2021 that many energy suppliers collapsed.
Ofgem has been increasing the price cap to try and ensure the remainder stay in business.Ofgem has been increasing the price cap to try and ensure the remainder stay in business.
What's the effect on customers?What's the effect on customers?
Further energy price rises are expected to put many people into fuel poverty, meaning they can't afford to heat (or cool) their homes to an adequate temperature. Energy price rises are expected to put many people into fuel poverty, meaning they can't afford to heat (or cool) their homes to an adequate temperature.
Energy company E.on UK suggests one in eight households are currently struggling to pay their bills. It says that could rise to 40% by October. Energy company E.on UK suggests one in eight households are currently struggling to pay their bills. It says that could rise to 40% by October when the new price cap kicks in.
The NHS has warned that growing numbers of people will see their health worsen, unless the government takes further action to limit price increases.The NHS has warned that growing numbers of people will see their health worsen, unless the government takes further action to limit price increases.
The NHS Confederation said many people will have to choose between skipping meals or heating their homes.The NHS Confederation said many people will 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 from October.All UK households will be given a one-off £400 discount on their fuel bills from October.
In addition, £650 will be paid to more than eight million low-income households who receive benefits or tax credits.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 disabled people.There are further payments of £300 to pensioner households and £150 to disabled people.
Fifty disability charities have called on Tory leadership rivals Liz Truss and Rishi Sunak to promise more supportFifty disability charities have called on Tory leadership rivals Liz Truss and Rishi Sunak to promise more support
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 billsOfgem: 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.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.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.
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