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What is the energy price cap and what will happen to bills? What is the energy price cap and what will happen to bills?
(21 days later)
Help with energy costs will be less generous from April, with bills for a typical household going up to £3,000. Energy bills for a typical household will rise to £3,000 a year in April.
However, there will be more support for the most vulnerable. That's because some government help with energy costs will end, although there will be extra money for the most vulnerable.
The assistance provided to businesses will also reduce from March. What are the energy price cap and the energy price guarantee?
What extra support will be available? A price cap is set every three months by Ofgem, the energy industry's regulator.
From April, some groups across the UK will receive cash payments to help with energy costs: It sets the maximum price suppliers can charge households per unit of energy on a standard - or default - tariff.
£900 to households on means-tested benefits However, after energy prices soared following Russia's invasion of Ukraine, the government announced a price guarantee would temporarily replace the cap. That will rise from £2,500 to £3,000 a year from April.
£300 for pensioner households So, Ofgem's new price cap for April to June - £3,280 a year for a typical household - will not affect household bills.
£150 to people on certain disability benefits The government's price guarantee will be in place until April 2024. It applies to all households in England, Scotland and Wales, with "the same level of support" in Northern Ireland.
Further details will follow.
What help is the government providing with energy bills?
What is the energy price guarantee and how is it changing?
Under the current energy price guarantee, a household using a typical amount of gas and electricity would pay £2,500 annually.
The guarantee began in October, and was originally meant to last for two years, before the government said it would end in April 2023.
Chancellor Jeremy Hunt then announced the guarantee would continue, increasing by £500 to £3,000 from April.
Previously, the energy regulator Ofgem set the maximum suppliers could charge households per unit of energy.
But after prices soared in the wake of Russia's invasion of Ukraine, the government announced its price guarantee would replace this energy cap.
Do I live in a typical household?Do I live in a typical household?
The £3,000 figure 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.The £3,000 figure 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.A kilowatt hour is a unit of energy used to calculate your bill.
Five tips for cutting home energy bills this winter
However, most households aren't typical.However, most households aren't typical.
Bills are based on how much energy you actually use, which depends on the number of occupants, the type of property and its energy efficiency. Bills are based on how much energy you actually use, which depends on the number of people, the type of property and its energy efficiency.
The price guarantee applies directly to all households in England, Scotland and Wales, with the "same level of support" available in Northern Ireland, which has its own energy market. What extra support will be available?
Six tips for cutting home energy bills this winter From April, some groups across the UK will receive extra help:
What is the National Grid doing to reduce bills? £900 to households on means-tested benefits - paid in three instalments in spring, autumn and spring 2024
A National Grid scheme running between November and March rewards households and businesses using less peak-time electricity. £300 for pensioner households
£150 to people on certain disability benefits
What help is the government providing with energy bills?
When will energy prices come down?
In recent months global energy prices have been falling, and experts predict cheaper prices for households later this year.
Analysts at Cornwall Insight think the energy price cap will fall to £2,153 in July, and remain close to that level for the rest of the year.
That would make the government's energy price guarantee of £3,000 from April redundant.
Cornwall Insight says households could once again be able to shop around for the best deal.
What is being done to reduce bills?
A scheme running between November and March rewards households and businesses using less peak-time electricity.
Customers need a smart meter to sign up for the trial, which will run on 12 "test days".Customers need a smart meter to sign up for the trial, which will run on 12 "test days".
People who don't use use high-energy appliances such as washing machines during a set hour of each test day will get up to £3 per kilowatt hour off their bill.People who don't use use high-energy appliances such as washing machines during a set hour of each test day will get up to £3 per kilowatt hour off their bill.
What help are businesses getting?What help are businesses getting?
Under the energy bill relief scheme:Under the energy bill relief scheme:
businesses get a discount based on a "government supported price" of 21.1p per kWh for electricity and 7.5p per KWh for gasbusinesses get a discount based on a "government supported price" of 21.1p per kWh for electricity and 7.5p per KWh for gas
organisations on fixed price contracts are eligible if their deal started after 1 April 2022organisations on fixed price contracts are eligible if their deal started after 1 April 2022
those on variable tariffs receive an automatic discount for each unit of energy usedthose on variable tariffs receive an automatic discount for each unit of energy used
the savings began to appear in November's bills (backdated to October) and are applied automatically the savings began to appear in November's bills (backdated to October) and are automatic
The scheme applies to all non-domestic energy customers in England, Scotland and Wales, with a parallel scheme in Northern Ireland.The scheme applies to all non-domestic energy customers in England, Scotland and Wales, with a parallel scheme in Northern Ireland.
Unlike domestic customers, businesses were only ever promised help for six months until March 2023. Unlike domestic customers, businesses were only promised help for six months until March 2023.
As expected, the government has confirmed that support for firms in the subsequent 12 months will be much less generous. Support for firms after this will be much less generous.
Under the new scheme, firms will get a discount on wholesale prices rather than costs being capped. Under a new scheme, firms will get a discount on wholesale prices, rather than costs being capped.
Heavy energy-using sectors, like glass, ceramics and steelmakers, will get a larger discount than others.Heavy energy-using sectors, like glass, ceramics and steelmakers, will get a larger discount than others.
The government said that the move was necessary to keep costs to the taxpayer down.
Firms fear ‘worst to come’ over energy billsFirms fear ‘worst to come’ over energy bills
Why have energy prices gone up?
Energy costs soared because the conflict in Ukraine reduced supplies of Russian gas.
Prices also rose because demand for energy rocketed after Covid restrictions ended.
What help have people already had?What help have people already had?
All households are automatically getting a one-off £400 discount on their fuel bills, spread over six months between October 2022 and March 2023. Most households are getting a one-off £400 discount on their fuel bills between October 2022 and March 2023.
Households in Northern Ireland - which has its own energy market - will receive a single payment of £600 starting in January, more than in the rest of the UK because of the widespread use of heating oil. Those in Northern Ireland are receiving a single payment of £600, more than in the rest of the UK, because of the widespread use of heating oil.
Eight million low-income households who get certain benefits or tax credits have received £650 in two payments.Eight million low-income households who get certain benefits or tax credits have received £650 in two payments.
Pensioner households got £300 and some disabled people were paid £150.Pensioner households got £300 and some disabled people were paid £150.
This help was being partly funded by a temporary windfall tax on oil and gas companies.This help was being partly funded by a temporary windfall tax on oil and gas companies.
Vulnerable families can also claim help through the Household Support Fund, and the Warm Home Discount scheme.Vulnerable families can also claim help through the Household Support Fund, and the Warm Home Discount scheme.
Energy companies also run hardship funds, although the regulator Ofgem said most firms needed to do more to help struggling customers.
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: Help with billsOfgem: Help with bills
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