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What is the energy price cap and why are bills going up so much? What is the energy price cap and why are bills going up so much?
(about 1 month later)
Typical household energy bills are likely to rise above £3,000 a year this winter, industry sources have warned BBC News.
This is more than the watchdog, Ofgem, was predicting when the government announced a support package to help offset soaring prices.
All UK households will receive a £400 discount on their fuel bills, while people on benefits will get an additional £650.All UK households will receive a £400 discount on their fuel bills, while people on benefits will get an additional £650.
The government says the payments - to help with steep rises in energy costs - will be partly funded by a temporary 25% tax on oil and gas companies' soaring profits.
When will I get the £400 and how will it be paid?When will I get the £400 and how will it be paid?
All households in England, Wales and Scotland will be given a one-off £400 discount on their fuel bills in October. This replaces a previous plan to take £200 off bills, which would have had to be repaid over five years. All households in England, Wales and Scotland will be given a one-off £400 discount on their fuel bills in October.
Direct debit and credit customers will have the money credited to their account. This replaces a previous plan to take £200 off bills, which would have had to be repaid over five years.
Customers with pre-payment meters will have the money applied to their meter, or paid via a voucher. Direct debit and credit customers will have the money added to their account balance.
The government says customers in Northern Ireland will also get the payments, although the way to do this has yet to be decided. Pre-payment customers will have the discount applied to their meter or receive it via a voucher.
The government says customers in Northern Ireland - which has a separate energy market - will also get the money, although it is not yet clear how.
The payments will be partly funded by a temporary 25% tax on oil and gas companies' profits.
Who will get the £650 payment?Who will get the £650 payment?
A £650 payment will be made to more than eight million low-income households who receive Universal Credit, tax credits, pension credit and other means-tested benefits.A £650 payment will be made to more than eight million low-income households who receive Universal Credit, tax credits, pension credit and other means-tested benefits.
For many people this will be paid into bank accounts in two instalments - in July and the autumn. Payments for those on tax credits only will follow shortly afterwards. For many people it will be paid into bank accounts in two instalments - in July and the autumn.
Payments for those who only receive tax credits will follow shortly afterwards.
What other help is there?What other help is there?
Disabled people will receive £150 (plus the £650 payment if they also qualify for that).Disabled people will receive £150 (plus the £650 payment if they also qualify for that).
Pensioner households who receive the winter fuel payment will get £300.Pensioner households who receive the winter fuel payment will get £300.
So in theory, a low-income pensioner who has a disability could get £1,500.So in theory, a low-income pensioner who has a disability could get £1,500.
UK households to get energy bill discounts of £400
How fast are energy bills rising?How fast are energy bills rising?
The maximum price which suppliers can charge customers in England, Scotland and Wales is called the energy price cap.The maximum price which suppliers can charge customers in England, Scotland and Wales is called the energy price cap.
At the beginning of April, the price cap for a typical household rose from £1,277 to £1,971 per year. For pre-payment customers it increased from £1,309 to £2,017. How much you actually pay depends on how much energy you use. At the beginning of April, the price cap for a typical household rose by £700 from £1,277 to £1,971 per year. For pre-payment customers it increased from £1,309 to £2,017. How much you actually pay depends on how much energy you use.
Bill are expected to rise even further. Bills are expected to rise even further.
UK energy watchdog Ofgem said the price cap could rise to about £2,800 from October. In May, Ofgem - which sets the price cap - said it could rise to about £2,800 from October, when it is next updated.
But BBC News has seen industry calculations suggesting typical households could in fact see bills above £3,000, however they pay.
The government said it did not recognise these latest figures but added it and Ofgem "keep a close watch on energy prices".
Why is the energy price cap rising so much?Why is the energy price cap rising so much?
The energy price cap is designed to protect consumers from short-term changes in prices. It is adjusted every six months (although Ofgem wants to reduce this to three months). The energy price cap is designed to protect consumers from short-term changes in prices. It is adjusted every six months (although Ofgem wants to reduce the gap to three months).
It is based on the price energy suppliers pay producers for electricity and gas. The cap is based on the price energy suppliers pay producers for electricity and gas.
This has risen sharply because demand for gas increased as the Covid pandemic eased, and because the war in Ukraine has threatened supplies from Russia.This has risen sharply because demand for gas increased as the Covid pandemic eased, and because the war in Ukraine has threatened supplies from Russia.
The price cap doesn't apply in Northern Ireland, but households there are also seeing bills rise. The price cap doesn't apply in Northern Ireland, but households there have also seen bills rise.
What's been the effect on customers?What's been the effect on customers?
There have been warnings that UK households are facing a "cost of living catastrophe".There have been warnings that UK households are facing a "cost of living catastrophe".
Fuel costs are one of the main factors which have driven the UK inflation rate up to 9% - its highest for 40 years.Fuel costs are one of the main factors which have driven the UK inflation rate up to 9% - its highest for 40 years.
Why are prices rising so quickly? Many people are expected to face "fuel poverty" - when a household has to spend a high proportion of its income on energy bills.
There have also been several warnings that many households face what's called fuel poverty - when a household has to spend a high proportion of its income on energy bills. According to the National Energy Action (NEA) charity: "Millions will simply not be able to heat their homes [this winter]. We will see serious ill health and early deaths for those most susceptible to the cold."
What other help is available?What other help is available?
The government is doubling the Household Support Fund to £500m. This money is given to local authorities in England to support vulnerable families.The government is doubling the Household Support Fund to £500m. This money is given to local authorities in England to support vulnerable families.
Households in England have already been given a £150 council tax rebate to cope with the rise in fuel prices, if their homes are in bands A-D. Similar schemes are in place in Wales and Scotland.Households in England have already been given a £150 council tax rebate to cope with the rise in fuel prices, if their homes are in bands A-D. Similar schemes are in place in Wales and Scotland.
English councils also have access to a "discretionary fund" for extra payments, including to people living in other council tax bands. However, the NEA told BBC News some of the poorest households in England and Wales had struggled to access the rebate.
In Northern Ireland the government has been given money to make payments, but political uncertainty has meant the cash hasn't yet been released. English councils also have access to a "discretionary fund" to make extra payments, including to people living in other council tax bands.
In Northern Ireland the government has been given money to make payments, but political uncertainty there has meant the cash hasn't yet been released.
Eligibility is also being expanded for the Warm Home Discount, which offers low income households a £150 one-off annual discount on their electricity bill between October and March.Eligibility is also being expanded for the Warm Home Discount, which offers low income households a £150 one-off annual discount on their electricity bill between October and March.
All the big energy firms have hardship funds, and customers can also get advice from organisations such as Citizens Advice, Turn2Us or the StepChange debt charity. All the big energy firms have hardship funds, and customers can also get advice from organisations including the NEA, Citizens Advice, Turn2Us or the StepChange debt charity.
What can I do to save on fuel costs?What can I do to save on fuel costs?
Fuel providers are currently not generally trying to tempt new customers with cheap offers. People who are already on fixed deals are advised to stay put. Fuel providers are currently not generally trying to tempt new customers with cheap offers. Most people who are already on fixed deals are advised to stay put.
Otherwise, households are being encouraged to save money by improving energy efficiency.Otherwise, households are being encouraged to save money by improving energy efficiency.
The Energy Saving Trust says several small changes could help people with rising energy costs. The Energy Saving Trust says several small changes could help offset some of the rising energy costs.