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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?
(about 8 hours later)
UK households will find out how much their bills will increase when a new energy price cap is announced on Friday. UK households will find out how much their bills will increase when the new energy price cap is announced on Friday.
The average annual household bill for gas and electricity could go on to reach £4,650 in January, according to analysts Cornwall Insight. The average annual household bill for gas and electricity could reach £4,650 in January, when the cap is next reviewed, according to analysts Cornwall Insight.
Plans to cut bills for some households using less power at peak times will be announced soon. However, plans to make energy cheaper for households who use less during peak times are expected in early September.
What is the energy price cap?What is the energy price cap?
The price cap is the maximum price suppliers can charge households for each unit of energy they use. It is set by Ofgem, the energy regulator. The price cap is set by Ofgem, the energy regulator. It sets the maximum price that energy companies can charge households on a standard variable tariff for each unit of energy (kilowatt hour or KwH) they use.
In April it was raised by an unprecedented 54% - meaning a household using a typical amount of gas and electricity would pay £1,971 per year. It's based on how much the companies have to pay the firms which produce electricity and gas, and is now reviewed every three months.
If you use a lot of energy compared with others, your bill will be higher than the average price cap figure. If you use less, it will be lower. Ofgem then calculates how much a household which uses the average amount of energy will have to pay over a 12-month period - assuming they pay by direct debt.
Ofgem will now adjust the cap every three months, based on how much energy suppliers are paying the firms which produce electricity and gas. People who use comparatively more energy will pay more, while the bill will be cheaper for those who use less.
It is in force in England, Scotland and Wales, and is designed to protect consumers from short-term changes. Energy prices in Northern Ireland are governed separately, but they have also risen sharply. Customers who don't pay by direct debit or who use prepayment meters pay more for the energy they use.
The price cap applies in England, Scotland and Wales, and is designed to protect consumers from short-term changes.
Energy prices in Northern Ireland are controlled separately, but have also risen sharply.
How high might bills go?How high might bills go?
The average annual household bill could go up to £3,554 when the price cap for October is announced, Cornwall Insight says. In April, Ofgem raised the price cap by an unprecedented 54% - meaning the average bill rose to £1,971 per year.
It expects the average bill to increase again in January, to £4,650. The average annual bill could go up to £3,554 when the price cap for October is announced, Cornwall Insight says. Last winter, the typical bill was £1,277.
That is £388 a month, rather than the current £164 a month. It then expects the average bill to increase again in January, to £4,650, or £388 a month, compared to the current £164 a month.
However, Ofgem has urged people to treat predictions of future price cap levels with "extreme caution".However, Ofgem has urged people to treat predictions of future price cap levels with "extreme caution".
UK inflation could hit 18% next year, experts warn What's the plan to encourage off-peak use?
Would it help to use energy off peak and use a smart meter? National Grid, which runs the UK's electricity system, plans to offer discounts to households which cut their electricity use at peak times.
Plans to enable households to get discounts on electricity bills if they cut use at peak times are set to be announced within a couple of weeks. Under its scheme, which is due to be announced in early September, households which avoid using items like tumble dryers, dishwashers and games consoles between 17:00 and 20:00 BST would get rebates for every kilowatt hour (kWh) of energy they save during this time.
Those who stop using items like tumble dryers, dishwashers and games consoles between 17:00 and 20:00 could get rebates of up to £6 for every kilowatt hour (kWh) saved, National Grid ESO, which will run the scheme, said. However, it's thought only households with smart meters will qualify, and it can take a few weeks to get one installed.
However, it's likely only households with smart meters will qualify, and it typically takes a few weeks to get one installed. The Energy Saving Trust says several small changes to energy habits could also help, such as limiting your shower time and air drying your clothes.
The Energy Saving Trust says several small changes could also help. Why is the energy cap so high?
Why is the energy cap being raised so high? Energy prices rose sharply when lockdown was lifted and the economy returned to normal.
Energy prices rose sharply when lockdown was lifted and the economy returned to normal speed. They have also increased because the war in Ukraine has reduced supplies of Russian gas.
They have also increased because the war in Ukraine has reduced supplies of gas from Russia. Europe is getting 90% less gas from Russia than it was this time last year, according to David Fyfe, chief economist at Argus Media, which advises energy companies.
Gas and electricity producers have raised their prices so rapidly that many energy suppliers have collapsed. This has pushed up the price of gas across the continent, including the UK.
Gas and electricity producers raised their prices so rapidly that many energy suppliers collapsed.
Ofgem has been raising the price cap to try and ensure the remainder stay in business.Ofgem has been raising the price cap to try and ensure the remainder stay in business.
How Russia is cutting off gas to Europe It says adjusting the price cap every three months, rather than every six months, will reduce instability.
Can the world cope without Russian oil and gas?
What's the effect on customers?What's the effect on customers?
Fuel price rises are expected to pitch many people into fuel poverty.Fuel price rises are expected to pitch many people into fuel poverty.
Energy company E.on UK suggests one in eight households are currently struggling to pay their bills, and says 40% may be struggling by October.Energy company E.on UK suggests one in eight households are currently struggling to pay their bills, and says 40% may be struggling by October.
Rising numbers of people will fall sick and see their health worsen unless the government takes further action to limit energy price rises, the NHS says. The NHS has warned that rising numbers of people will see their health worsen, unless the government takes further action to limit price rises.
The NHS Confederation said many people would have to choose between skipping meals to heat their homes or having to live in cold and damp conditions. The NHS Confederation said many people would have to choose between skipping meals or heating their homes.
Energy bills could go up before October price cap rise
What help will I get to pay my energy bills?What help will I get to pay my energy bills?
All UK households will be given a one-off £400 discount on their fuel bills in October.All UK households will be given a one-off £400 discount on their fuel bills in October.
£650 will be paid to more than eight million low-income households who receive benefits or tax credits. In addition, £650 will be paid to more than eight million low-income households who receive benefits or tax credits.
There are additional payments of £300 to pensioner households and £150 to individuals receiving disability benefits. There are further payments of £300 to pensioner households and £150 to individuals receiving disability benefits.
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.
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?
Ofgem: Getting help if you can't afford your energy bills
What happens if I don't pay my energy bills?What happens if I don't pay my energy bills?
Your supplier must give you a chance to pay your debt through a payment plan. Your supplier must give you a chance to clear your debt through an agreed payment plan.
If you don't agree to this, they may try and make you have a pre-payment meter installed. If you don't agree, you may be forced to move to a pre-payment meter.
In extreme cases, you might be threatened with disconnection.In extreme cases, you might be threatened with disconnection.
What can I do if I can't afford my energy bill?What can I do if I can't afford my energy bill?
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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