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What is the energy price cap and how high could bills go? What is the energy price cap and what will happen to bills?
(about 11 hours later)
The government has reduced the amount of help it will offer with energy bills. The government has reduced the amount of help it will offer households with their energy bills.
The announcement came as part of its reversal of almost everything in September's mini-budget. There are warnings bills could now rise sharply in April.
How is help with energy bills changing?How is help with energy bills changing?
The government previously said annual energy bills for households using a typical amount of gas and electricity would be £2,500, for two years. The government previously said households using a typical amount of gas and electricity would pay £2,500 annually.
However, it now says its energy price guarantee will end in April 2023. So, only this winter will be covered. It said this "energy price guarantee" would last for two years.
What happens after that will depend on the outcome of a review, which will prioritise those most in need. However, it will now end in April 2023. So, only this winter's bills will be covered by the policy.
The review will be led by the Treasury, which is in charge of the country's finances.
Mr Hunt said it was necessary to save taxpayers money.
Business customers were only ever promised help for the first six months, with a review to decide what to do after that.
What Jeremy Hunt's statement means for youWhat Jeremy Hunt's statement means for you
How much will I pay? How much will I pay after April?
The government says the bill for a typical duel-fuel household which pays by direct debit will be £2,500 a year. Average household bills had been expected to rise to £3,549 a year before the government set the new maximum charges. What happens to bills after April will depend in part on a government review. It says this will prioritise those most in need.
For households that do not receive any further support, a typical annual energy bill could be £4,347 in the spring, according to analysts Cornwall Insight.
However, this depends on changes to the prices domestic energy suppliers pay for oil and gas.
Do I live in a typical household?
The £2,500 price for a typical household is based on a direct debit customer using 12,000 kWh (kilowatt hours) of gas and 2,900 kWh of electricity a year. A kilowatt hour is a unit of energy used to calculate your bill.
However, most households aren't typical, and your bill depends on how much energy you actually use.However, most households aren't typical, and your bill depends on how much energy you actually use.
Things like the number of occupants, the type of property and how energy efficient it is all make a difference.Things like the number of occupants, the type of property and how energy efficient it is all make a difference.
The price guarantee applies to all households in England, Scotland and Wales, with the "same level of support" available in Northern Ireland.The price guarantee applies to all households in England, Scotland and Wales, with the "same level of support" available in Northern Ireland.
Many people on fixed deals will also benefit. However, those on expensive fixed tariffs could still end up paying more than those on standard variable deals.
The government said its energy guarantee would cost £60bn for the first six months.
The cost will be met by an increase in government borrowing, but the likely cost of this has soared after financial markets reacted badly to the mini-budget's plans to introduce tax cuts worth £45bn. Most of these tax cuts are now being reversed.
Six tips for cutting home energy bills this winter
What help will businesses get with bills?What help will businesses get with bills?
Business customers have a different scheme to domestic ones. Business customers were only ever promised help for six months, with a review to decide what to do after that. The government says any subsequent help will be "targeted to those most affected".
But under the government's energy bill relief scheme: Under the energy bill relief scheme:
wholesale energy prices will be capped for firms and organisations for six months from 1 October businesses are given a discount based on a "government supported price" of 21.1p per kWh for electricity and 7.5p per KWh for gas
prices will be fixed at 21.1p per kWh for electricity and 7.5p per KWh for gas
the government says this is less than half the wholesale prices expected this winterthe government says this is less than half the wholesale prices expected this winter
organisations on fixed price contracts will be eligible if their deal started after 1 April 2022organisations on fixed price contracts will be eligible if their deal started after 1 April 2022
those on variable tariffs will receive an automatic discount for each unit of energy usedthose on variable tariffs will receive an automatic discount for each unit of energy used
the savings will begin to appear in November's bills (backdated to October) and will be applied automaticallythe savings will begin to appear in November's bills (backdated to October) and will be applied automatically
a review will be published in three months' time to identify "vulnerable" organisations needing support after March 2023a review will be published in three months' time to identify "vulnerable" organisations needing support after March 2023
The scheme will apply to all non-domestic energy customers in England, Scotland and Wales, with a parallel scheme in Northern Ireland.The scheme will apply to all non-domestic energy customers in England, Scotland and Wales, with a parallel scheme in Northern Ireland.
Why have energy prices gone up?Why have energy prices gone up?
Energy costs have soared because the conflict in Ukraine has reduced supplies of Russian gas. Prices have also risen because demand for energy has rocketed since Covid restrictions ended. Energy costs have soared because the conflict in Ukraine has reduced supplies of Russian gas.
These price increases are now being passed on to customers through an increase to the energy price cap. Prices also rose because demand for energy has rocketed since Covid restrictions ended.
This sets the highest amount suppliers are allowed to charge domestic households for each unit of energy they use.
These energy units are the kilowatt hours (kWh) shown on bills.
Dual-fuel customers on a standard variable tariff who pay by direct debit will now be charged a maximum average unit price of:
34p per kWh of electricity (currently 28p)
10.3p per kWh of gas (currently 7p)
The energy price cap also sets the standing charge for being connected to the grid. This will be 46p per day for electricity and 28p per day for gas, up from 45p and 27p respectively now.
Homes face winter power cuts in worst-case scenario
What other help can I get with my bills?What other help can I get with my bills?
All households are automatically getting a one-off £400 discount on their fuel bills from October. Customers have been warned not to fall for scams requesting personal details in order to get the reduction. All households are automatically getting a one-off £400 discount on their fuel bills from October.
Eight million low-income households who receive certain benefits or tax credits are receiving £650 in two payments.Eight million low-income households who receive certain benefits or tax credits are receiving £650 in two payments.
Pensioner households will get £300 and some disabled people will be paid £150.Pensioner households will get £300 and some disabled people will be paid £150.
This help is being partly funded by a temporary windfall tax on oil and gas companies.This help is being partly funded by a temporary windfall tax on oil and gas companies.
In addition, vulnerable families can claim help through the Household Support Fund, and the Warm Home Discount scheme.In addition, vulnerable families can claim help through the Household Support Fund, and the Warm Home Discount scheme.
Energy companies also run hardship funds, although the regulator Ofgem warned that most firms need to do do more to help customers who are struggling.Energy companies also run hardship funds, although the regulator Ofgem warned that most firms need to do do more to help customers who are struggling.
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