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What is the energy price cap and how high could bills go? What is the energy price cap and how high could bills go?
(6 days later)
Extra support to limit the rise in energy bills has been announced by Prime Minister Liz Truss.Extra support to limit the rise in energy bills has been announced by Prime Minister Liz Truss.
What is the energy plan?What is the energy plan?
Under the measures:Under the measures:
A typical household's energy bill will rise to £2,500 a year from 1 October (from £1,971)A typical household's energy bill will rise to £2,500 a year from 1 October (from £1,971)
The "energy price guarantee" will last for two yearsThe "energy price guarantee" will last for two years
This is not a limit on how much you will pay - your bill depends on how much energy you actually useThis is not a limit on how much you will pay - your bill depends on how much energy you actually use
Before the announcement, typical household bills had been due to rise to £3,549 a yearBefore the announcement, typical household bills had been due to rise to £3,549 a year
The plan applies to all households in England, Scotland and Wales. In Northern Ireland, the "same level of support" will be availableThe plan applies to all households in England, Scotland and Wales. In Northern Ireland, the "same level of support" will be available
The one-off £400 fuel bill discount payments for households will go aheadThe one-off £400 fuel bill discount payments for households will go ahead
Anyone that doesn't use mains gas and electricity - such as those using heating oil - will also receive equivalent help Anyone who doesn't use mains gas and electricity - such as those using heating oil - will receive equivalent help
Businesses will be protected for six months initiallyBusinesses will be protected for six months initially
What is the energy cap and how does it work?What is the energy cap and how does it work?
The energy price guarantee will replace the existing energy cap, which sets the the highest amount suppliers are allowed to charge households for every unit of energy they use.The energy price guarantee will replace the existing energy cap, which sets the the highest amount suppliers are allowed to charge households for every unit of energy they use.
These energy units are the kilowatt hours (kWh) on your bills.These energy units are the kilowatt hours (kWh) on your bills.
Under the new price guarantee, a typical household can now expect to pay about £2,500 a year. Under the new price guarantee, a typical household can now expect to pay about £2,500 a year. This is based on a household which uses 12,000 kWh of gas a year, and 2,900 kWh of electricity a year.
However, most households aren't actually typical. Many factors like the number of people in a house, the type of property and how much they use their heating all make a difference. But most households aren't actually typical. Many factors - like the number of people in a house, the type of property and how much they use their heating - all make a difference.
So, big energy users will pay more than £2,500, and people who use less energy will pay less.So, big energy users will pay more than £2,500, and people who use less energy will pay less.
The cap also limits the standing charge - the fee customers pay for being connected to the energy grid. From 1 October, dual-fuel customers on a standard variable tariff will pay:
34p per kWh of electricity
10.3p per kWh of gas
The government has said that many people on fixed deals will receive a discount equivalent to the support given to those on the price cap. However, anyone who chose an expensive fixed tariff would end up paying more than those on a standard variable tariff - even after the discount.
The standing charge - the fee customers pay for being connected to the energy grid - will be limited to 46p per day for electricity and 28p per day for gas.
Fixed energy deals could still be more expensive
How much will the energy guarantee cost and who will pay for it?How much will the energy guarantee cost and who will pay for it?
The government says it will set out the full cost of the scheme later in September, but estimates suggest it could be between £130bn-£150bn. The government says it will set out the full cost of the scheme later in September, but estimates suggest it could be between £130bn and £150bn.
It has confirmed it will be paid for through increased borrowing. It has confirmed it will be paid for through increased borrowing: this is when the government raises money by selling financial products called bonds to international investors - like pension funds. These bonds have to be paid back, usually after several years, with interest. This means taxpayers ultimately pay more than the amount raised.
This is when the government raises money by selling financial products called bonds to international investors - like pension funds. These bonds have to be paid back, usually after several years, with interest. This means taxpayers ultimately pay more than the amount raised.
Where does the government borrow billions from?Where does the government borrow billions from?
What help will businesses get with bills?What help will businesses get with bills?
Businesses, charities, schools and other organisations will also receive help.Businesses, charities, schools and other organisations will also receive help.
At present, these aren't covered by an energy price cap in the way that households are.At present, these aren't covered by an energy price cap in the way that households are.
The government says they will now get an "equivalent guarantee" on energy prices for six months.The government says they will now get an "equivalent guarantee" on energy prices for six months.
After six months, "vulnerable" businesses - including pubs - will receive further support.After six months, "vulnerable" businesses - including pubs - will receive further support.
In three months' time a review will be carried out to identify where the extra support should be targeted.In three months' time a review will be carried out to identify where the extra support should be targeted.
What additional help will I get to pay my energy bills?What additional help will I get to pay my energy bills?
All households will be given a one-off £400 discount on their fuel bills from October, as previously announced.All households will be given a one-off £400 discount on their fuel bills from October, as previously announced.
In addition, £650 will be paid to more than eight million low-income households who receive many benefits or tax credits.In addition, £650 will be paid to more than eight million low-income households who receive many benefits or tax credits.
Further payments of £300 to pensioner households and £150 to disabled people will also go ahead.Further payments of £300 to pensioner households and £150 to disabled people will also go ahead.
The government hasn't said whether these will be repeated next October.The government hasn't said whether these will be repeated next October.
Fifty disability charities have called on the government to offer more supportFifty disability charities have called on the government to offer 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.
What cost-of-living payments will I get?What cost-of-living payments will I get?
What can I do if I can't pay my energy bill?What can I do if I can't pay my energy bill?
Ofgem: Getting help if you can't afford your energy billsOfgem: Getting help if you can't afford your energy bills