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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?
(6 days later)
The energy regulator Ofgem has changed the rules so that its price cap can change every three months instead of every six. Household energy bills are expected to rise even higher than previously feared, analysts say.
Another sharp rise in energy bills is expected in October. Cornwall Insight has predicted that a typical annual bill could reach £4,266 in January, leading to fears about how people will cover the costs.
It has led to fears about how people will cope with soaring costs.
How high are bills going to go?How high are bills going to go?
The energy price cap - the maximum amount suppliers can charge customers in England, Scotland and Wales for each unit of energy - will go up in October.The energy price cap - the maximum amount suppliers can charge customers in England, Scotland and Wales for each unit of energy - will go up in October.
Energy industry analysts Cornwall Insight estimated the typical domestic customer was likely to pay £3,358 a year from October. Energy industry analysts Cornwall Insight predict an average annual bill will reach £3,582 at this point - £200 higher than the previous estimate.
Now that the cap can rise every three months, it expects it to go up again to £3,615 a year from January. And in January, the next time the cap is due to be changed, it expects it to go up again to £4,266.
The higher estimate means the average household would be paying £355 a month, instead of £164 a month currently.
The average bill was £1,400 a year in October 2021.The average bill was £1,400 a year in October 2021.
Energy bills to change every three months Warning energy prices to hit over £4,200 in January
However, regulator Ofgem, questioned the reliability of future forecasts and urged "extreme caution" over predictions for January.
What is the energy price cap and why is it rising so much?What is the energy price cap and why is it rising so much?
The energy price cap is designed to protect consumers from short-term price changes.The energy price cap is designed to protect consumers from short-term price changes.
It is adjusted every three months and is based on the price energy suppliers pay producers for electricity and gas. It is adjusted by Ofgem every three months and is based on the price energy suppliers pay producers for electricity and gas. October's price cap is due to be announced at the end of this month.
The regulator hopes that changing the cap every three months instead of every six will make it less likely that more energy suppliers will collapse. Energy prices have risen sharply because demand for gas increased when Covid restrictions eased, and because the war in Ukraine has threatened supplies from Russia.
Prices have risen sharply because demand for gas increased when Covid restrictions eased, and because the war in Ukraine has threatened supplies from Russia. Ofgem recently changed the rules so the cap can be revised every three months instead of every six, saying this would make it less likely that more energy suppliers would collapse.
Cornwall Insight said this change was one of the reasons it had increased its estimates.
How Russia is cutting off gas to EuropeHow Russia is cutting off gas to Europe
Can the world cope without Russian oil and gas?Can the world cope without Russian oil and gas?
The price cap doesn't apply in Northern Ireland, but households there have also seen bills rise.The price cap doesn't apply in Northern Ireland, but households there have also seen bills rise.
What's the effect on customers?What's the effect on customers?
Fuel costs are one of the main reasons UK inflation - the rate at which prices increase - is over 9%. This is higher than at any point in the past 40 years.Fuel costs are one of the main reasons UK inflation - the rate at which prices increase - is over 9%. This is higher than at any point in the past 40 years.
Many people are expected to face "fuel poverty" - when a household has to spend a high proportion of its income on energy bills.Many people are expected to face "fuel poverty" - when a household has to spend a high proportion of its income on energy bills.
According to the National Energy Action 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."According to the National Energy Action 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 help am I getting to pay my energy bills?What help am I getting to pay my energy bills?
All households in England, Wales and Scotland will be given a one-off £400 discount on their fuel bills in October. The government says customers in Northern Ireland will also get the money.All households in England, Wales and Scotland will be given a one-off £400 discount on their fuel bills in October. The government says customers in Northern Ireland will also get the money.
This will be applied in monthly instalments over six months, with a reduction of £66 in October and November, and £67 a month from December to March 2023.This will be applied in monthly instalments over six months, with a reduction of £66 in October and November, and £67 a month from December to March 2023.
Direct debit and credit customers will have the money credited to their account. 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 credited to their account. Customers with pre-payment meters will have the money applied to their meter, or paid via a voucher.
In addition, 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.In addition, 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.
Disabled people will also receive £150 (plus the £650 payment if they also qualify for that).Disabled people will also receive £150 (plus the £650 payment if they also qualify for that).
And pensioner households who receive the winter fuel payment will get £300.And 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.
The government has rejected introducing any new big measures until a new prime minister is in place.
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?
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 whose homes are in bands A-D should have received a £150 council tax rebate to help cope with the rise in fuel prices. Similar schemes are in place in Wales and Scotland.Households in England whose homes are in bands A-D should have received a £150 council tax rebate to help cope with the rise in fuel prices. Similar schemes are in place in Wales and Scotland.
English councils also have access to a discretionary fund to make extra payments, including to people living in other council tax bands.English councils also have access to a discretionary fund to make extra payments, including to people living in other council tax bands.
Payments have also started being made in Northern Ireland.Payments have also started being made in Northern Ireland.
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 including the NEA, 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. Most people on fixed deals are advised to stay put.Fuel providers are currently not generally trying to tempt new customers with cheap offers. Most people on fixed deals are advised to stay put.
Otherwise, households are being encouraged to improve energy efficiency.Otherwise, households are being encouraged to improve energy efficiency.
The Energy Saving Trust says several small changes could help.The Energy Saving Trust says several small changes could help.
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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