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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 could bills go?
(5 days later)
Energy bills for a typical household will rise to £3,549 a year on 1 October, when a new price cap is introduced. The new prime minister, Liz Truss, has promised to take action on rising energy bills. The details are still to be confirmed.
With calls for more help with costs growing, plans to reduce bills for households using less energy at peak times are expected soon. At present, energy bills for a typical household are due to soar when a new price cap is introduced next month.
What is the energy price cap and what will I pay? What is the government doing about energy bills?
The £3,549 figure is not a limit on the amount you will actually pay for your energy. It is the annual bill for a typical household, now that the price cap has been increased. Right now, the annual energy bill for a typical household is £1,971. From 1 October, however, that's due to rise 80% - to £3,549.
Big energy users will pay more, and people who use less energy will pay less. On Thursday, Ms Truss will announce plans to limit the October increase.
Energy bills are based on a price cap - the maximum amount that energy companies are allowed to charge households for each unit of energy they use (the kilowatt hour or kWh on your bills). The price cap also limits the standing charge - the fee customers pay for being connected to the energy grid. It's understood that the plans will see a typical bill rise to £2,500 instead. That's about £1,000 less than expected, but still about £500 more than at present.
Ofgem, the energy regulator, sets the price cap according to how much energy companies themselves have to pay for the electricity and gas which they supply to households. It sets the energy price cap every three months for England, Scotland and Wales. As well as households, businesses are also expected to receive some help. Many firms are currently facing even sharper rises than households.
In Northern Ireland bills have also increased sharply - but not by as much as in the rest of the UK. The Utility Regulator says the typical household in Belfast or the west of Northern Ireland will now have an annual bill of just under £2,500. To limit the amount customers' bills increase by, energy companies will be able to access government-backed loans.
The government is expected to fund the measures by borrowing about £100bn. However, the final bill will depend on the cost of energy on the international markets.
What is the energy price cap?
The energy price cap sets out the maximum amount energy companies are allowed to charge households for each unit of energy they use (the kilowatt hour or kWh on your bills).
The cap also limits the standing charge - the fee customers pay for being connected to the energy grid.
The increase in bills to £3,549 - or £2,500 as is now expected - is not a limit on the amount households will actually pay for their energy. Instead, it is an estimate of what a typical household would pay after the price cap changes.
Big energy users would pay more, and people who use less energy would pay less.
Ofgem, the energy regulator, sets the price cap according to how much energy companies themselves have to pay for the electricity and gas which they supply to households. From October it is due to update the energy price cap every three months for England, Scotland and Wales.
There's no energy cap in Northern Ireland. Bills there have also increased sharply - but not by as much as the rest of the UK. The Utility Regulator says the typical household in Belfast or the west of Northern Ireland will now have an annual bill of about £2,500.
Ofgem: Check if the energy price cap affects youOfgem: Check if the energy price cap affects you
How high might bills go? Seven ideas to combat high energy costs
The typical bill under the existing price cap is £1,971 a year, or £2,017 for the 4.5 million households with a pre-payment meter.
The rise in October to £3,549, or £3,608 for those on pre-payment meters, is an 80% increase.
Analysts at Cornwall Insight forecast further increases in January, when the price cap is updated again. They say the typical bill will then be £5,386 a year and that more rises will follow.
However, Ofgem says predictions of future price cap levels should be treated with "extreme caution".
How can I save money on my energy bills?
Plans to offer discounts to households which use less electricity at peak times, are expected in early September from National Grid ESO, which runs the UK's electricity system.
Customers who don't use energy-hungry appliances between 17:00 and 20:00 BST could get money back for the energy they save during this time.
However, it's thought only households with smart meters will qualify and it can take a few weeks to get one installed.
The Energy Saving Trust says making several small changes to energy habits can also help reduce bills, such as taking quicker showers and hanging out clothes to dry.
According to the Centre for Sustainable Energy, tumble dryers use between 2 and 3 kWh for every hour they're on, while ovens use about 2 kWh and dishwashers between 1 and 1.5 kWh.
Improving your home's insulation can also cut bills.
Why are energy prices so high?Why are energy prices so high?
Energy prices rose sharply when lockdown lifted and the economy began to return to normal.Energy prices rose sharply when lockdown lifted and the economy began to return to normal.
They have also increased because Russian has sharply cut its supplies of gas to Europe.. They have also increased because Russia has sharply cut its supplies of gas to Europe.
This has pushed up the price of gas across the continent, including in the UK.This has pushed up the price of gas across the continent, including in the UK.
Gas and electricity producers raised their prices so rapidly in 2021 that many energy suppliers collapsed.Gas and electricity producers raised their prices so rapidly in 2021 that many energy suppliers collapsed.
Ofgem has been increasing the price cap to try and ensure the remainder stay in business.Ofgem has been increasing the price cap to try and ensure the remainder stay in business.
What's the effect on customers?What's the effect on customers?
Energy price rises are expected to put many people into fuel poverty, meaning they can't afford to keep their homes at an adequate temperature. The expected energy price rises are expected to put many people into fuel poverty, meaning they can't afford to keep their homes at an adequate temperature.
Energy company E.on UK suggests one in eight households are currently struggling to pay their bills. It says that could rise to 40% by October when the new price cap kicks in. Energy company E.on UK suggests one in eight households are currently struggling to pay their bills. It says that could rise to 40% by October if the new energy price cap kicks in.
The NHS has warned that growing numbers of people will see their health worsen, unless the government takes further action to limit price increases. The NHS has warned that growing numbers of people will see their health worsen, unless the government takes action.
The NHS Confederation said many people will have to choose between skipping meals or heating their homes.The NHS Confederation said many people will have to choose between skipping meals or heating their homes.
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Worried about energy bills? The BBC's Colletta Smith tells you - in a minute - about four discounts and payments that could helpWorried about energy bills? The BBC's Colletta Smith tells you - in a minute - about four discounts and payments that could help
Worried about energy bills? The BBC's Colletta Smith tells you - in a minute - about four discounts and payments that could helpWorried about energy bills? The BBC's Colletta Smith tells you - in a minute - about four discounts and payments that could help
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 from October. The government announced that all UK households will be given a one-off £400 discount on their fuel bills from October.
In addition, £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 further payments of £300 to pensioner households and £150 to disabled people.There are further payments of £300 to pensioner households and £150 to disabled people.
Fifty disability charities have called on Tory leadership rivals Liz Truss and Rishi Sunak to promise more supportFifty disability charities have called on Tory leadership rivals Liz Truss and Rishi Sunak to promise more support
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 billsOfgem: 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 clear your debt through an agreed payment plan.Your supplier must give you a chance to clear your debt through an agreed payment plan.
If you don't agree, the supplier may make you move to a pre-payment meter.If you don't agree, the supplier may make you 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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