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What is the energy price cap and how high could bills go? What is the energy price cap and how high could bills go?
(4 days later)
Households are being advised to take energy meter readings before prices rise on 1 October.Households are being advised to take energy meter readings before prices rise on 1 October.
From that date, typical annual domestic energy bills will rise to £2,500. Bills for businesses are also changing.From that date, typical annual domestic energy bills will rise to £2,500. Bills for businesses are also changing.
Why should you take a meter reading?Why should you take a meter reading?
On 1 October, the annual energy bill for a typical household will rise from £1,971 to £2,500 - a 27% increase.On 1 October, the annual energy bill for a typical household will rise from £1,971 to £2,500 - a 27% increase.
Submitting accurate meter readings means providers won't accidentally charge you at the higher rate for your earlier energy use.Submitting accurate meter readings means providers won't accidentally charge you at the higher rate for your earlier energy use.
Energy UK, representing suppliers, said most firms will accept readings for a few days either side of 1 October.Energy UK, representing suppliers, said most firms will accept readings for a few days either side of 1 October.
Why are prices going up?Why are prices going up?
Energy costs have soared because the conflict in Ukraine has reduced supplies of Russian gas. Prices have also risen because demand for energy has rocketed since Covid restrictions ended.Energy costs have soared because the conflict in Ukraine has reduced supplies of Russian gas. Prices have also risen because demand for energy has rocketed since Covid restrictions ended.
These price increases are now being passed on to customers through an increase to the energy price cap.These price increases are now being passed on to customers through an increase to the energy price cap.
This sets the highest amount suppliers are allowed to charge domestic households for each unit of energy they use.This sets the highest amount suppliers are allowed to charge domestic households for each unit of energy they use.
These energy units are the kilowatt hours (kWh) shown on bills.These energy units are the kilowatt hours (kWh) shown on bills.
Dual-fuel customers on a standard variable tariff who pay by direct debit will now be charged a maximum of: Dual-fuel customers on a standard variable tariff who pay by direct debit will now be charged a maximum average unit price of:
34p per kWh of electricity (currently 28p)34p per kWh of electricity (currently 28p)
10.3p per kWh of gas (currently 7p)10.3p per kWh of gas (currently 7p)
The energy price cap also sets the standing charge for being connected to the grid. This will be 46p per day for electricity and 28p per day for gas, up from 45p and 27p respectively now.The energy price cap also sets the standing charge for being connected to the grid. This will be 46p per day for electricity and 28p per day for gas, up from 45p and 27p respectively now.
How much will I pay?How much will I pay?
The government says a typical household can expect to pay £2,500 a year. Average household bills had been expected to rise to £3,549 a year before the government set the new maximum charges.The government says a typical household can expect to pay £2,500 a year. Average household bills had been expected to rise to £3,549 a year before the government set the new maximum charges.
However, most households aren't typical, and your bill depends on how much energy you actually use.However, most households aren't typical, and your bill depends on how much energy you actually use.
Things like the number of occupants, the type of property and how energy efficient it is all make a difference.Things like the number of occupants, the type of property and how energy efficient it is all make a difference.
The government said the £2,500 cap will be in place for two years.The government said the £2,500 cap will be in place for two years.
The price guarantee applies to all households in England, Scotland and Wales, with the "same level of support" available in Northern Ireland.The price guarantee applies to all households in England, Scotland and Wales, with the "same level of support" available in Northern Ireland.
Many people on fixed deals will also benefit. However, those on expensive fixed tariffs could still end up paying more than those on standard variable deals.Many people on fixed deals will also benefit. However, those on expensive fixed tariffs could still end up paying more than those on standard variable deals.
The government said its energy guarantee would cost £60bn for the first six months. However, industry analysis suggests the total bill could be between £130bn and £150bn.The government said its energy guarantee would cost £60bn for the first six months. However, industry analysis suggests the total bill could be between £130bn and £150bn.
The cost will be met by an increase in government borrowing, but the likely cost of this has soared after financial markets reacted badly to the chancellor's plans to introduce tax cuts worth £45bn.The cost will be met by an increase in government borrowing, but the likely cost of this has soared after financial markets reacted badly to the chancellor's plans to introduce tax cuts worth £45bn.
Where does the government borrow billions from?Where does the government borrow billions from?
What help will businesses get with bills?What help will businesses get with bills?
Business customers weren't previously covered by the energy cap.Business customers weren't previously covered by the energy cap.
Under the government's energy bill relief scheme:Under the government's energy bill relief scheme:
wholesale energy prices will be capped for firms and organisations for six months from 1 Octoberwholesale energy prices will be capped for firms and organisations for six months from 1 October
prices will be fixed at 21.1p per kWh for electricity and 7.5p per KWh for gasprices will be fixed at 21.1p per kWh for electricity and 7.5p per KWh for gas
the government says this is less than half the wholesale prices expected this winterthe government says this is less than half the wholesale prices expected this winter
organisations on fixed price contracts will be eligible if their deal started after 1 April 2022organisations on fixed price contracts will be eligible if their deal started after 1 April 2022
those on variable tariffs will receive an automatic discount for each unit of energy usedthose on variable tariffs will receive an automatic discount for each unit of energy used
the savings will begin to appear in November's bills (backdated to October) and will be applied automaticallythe savings will begin to appear in November's bills (backdated to October) and will be applied automatically
a review will be published in three months' time to identify "vulnerable" organisations needing support after March 2023a review will be published in three months' time to identify "vulnerable" organisations needing support after March 2023
The scheme will apply to all non-domestic energy customers in England, Scotland and Wales, with a parallel scheme in Northern Ireland.The scheme will apply to all non-domestic energy customers in England, Scotland and Wales, with a parallel scheme in Northern Ireland.
What other help can I get with my bills?What other help can I get with my bills?
All households are automatically getting a one-off £400 discount on their fuel bills from October. Customers have been warned not to fall for scams requesting personal details in order to get the reduction.All households are automatically getting a one-off £400 discount on their fuel bills from October. Customers have been warned not to fall for scams requesting personal details in order to get the reduction.
Eight million low-income households who receive certain benefits or tax credits will also receive £650.Eight million low-income households who receive certain benefits or tax credits will also receive £650.
Pensioner households will receive £300 and some disabled people will get £150.Pensioner households will receive £300 and some disabled people will get £150.
This help is being partly funded by a temporary windfall tax on oil and gas companies.This help is being partly funded by a temporary windfall tax on oil and gas companies.
In addition, vulnerable families can claim help through the Household Support Fund, and the Warm Home Discount scheme.In addition, vulnerable families can claim help through the Household Support Fund, and the Warm Home Discount scheme.
Energy companies also run hardship funds, although the regulator Ofgem warned that most firms need to do do more to help customers who are struggling.Energy companies also run hardship funds, although the regulator Ofgem warned that most firms need to do do more to help customers who are struggling.
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: Getting help if you can't afford your energy billsOfgem: Getting help if you can't afford your energy bills