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What is the energy price cap and what will happen to bills? | What is the energy price cap and what will happen to bills? |
(21 days later) | |
Energy bills for a typical household will rise to £3,000 a year in April. | |
That's because some government help with energy costs will end, although there will be extra money for the most vulnerable. | |
What are the energy price cap and the energy price guarantee? | |
A price cap is set every three months by Ofgem, the energy industry's regulator. | |
It sets the maximum price suppliers can charge households per unit of energy on a standard - or default - tariff. | |
However, after energy prices soared following Russia's invasion of Ukraine, the government announced a price guarantee would temporarily replace the cap. That will rise from £2,500 to £3,000 a year from April. | |
So, Ofgem's new price cap for April to June - £3,280 a year for a typical household - will not affect household bills. | |
The government's price guarantee will be in place until April 2024. It applies to all households in England, Scotland and Wales, with "the same level of support" in Northern Ireland. | |
Do I live in a typical household? | Do I live in a typical household? |
The £3,000 figure for a typical household is based on a direct debit customer using 12,000 kWh (kilowatt hours) of gas and 2,900 kWh of electricity a year. | The £3,000 figure for a typical household is based on a direct debit customer using 12,000 kWh (kilowatt hours) of gas and 2,900 kWh of electricity a year. |
A kilowatt hour is a unit of energy used to calculate your bill. | A kilowatt hour is a unit of energy used to calculate your bill. |
Five tips for cutting home energy bills this winter | |
However, most households aren't typical. | However, most households aren't typical. |
Bills are based on how much energy you actually use, which depends on the number of people, the type of property and its energy efficiency. | |
What extra support will be available? | |
From April, some groups across the UK will receive extra help: | |
£900 to households on means-tested benefits - paid in three instalments in spring, autumn and spring 2024 | |
£300 for pensioner households | |
£150 to people on certain disability benefits | |
What help is the government providing with energy bills? | |
When will energy prices come down? | |
In recent months global energy prices have been falling, and experts predict cheaper prices for households later this year. | |
Analysts at Cornwall Insight think the energy price cap will fall to £2,153 in July, and remain close to that level for the rest of the year. | |
That would make the government's energy price guarantee of £3,000 from April redundant. | |
Cornwall Insight says households could once again be able to shop around for the best deal. | |
What is being done to reduce bills? | |
A scheme running between November and March rewards households and businesses using less peak-time electricity. | |
Customers need a smart meter to sign up for the trial, which will run on 12 "test days". | Customers need a smart meter to sign up for the trial, which will run on 12 "test days". |
People who don't use use high-energy appliances such as washing machines during a set hour of each test day will get up to £3 per kilowatt hour off their bill. | People who don't use use high-energy appliances such as washing machines during a set hour of each test day will get up to £3 per kilowatt hour off their bill. |
What help are businesses getting? | What help are businesses getting? |
Under the energy bill relief scheme: | Under the energy bill relief scheme: |
businesses get a discount based on a "government supported price" of 21.1p per kWh for electricity and 7.5p per KWh for gas | businesses get a discount based on a "government supported price" of 21.1p per kWh for electricity and 7.5p per KWh for gas |
organisations on fixed price contracts are eligible if their deal started after 1 April 2022 | organisations on fixed price contracts are eligible if their deal started after 1 April 2022 |
those on variable tariffs receive an automatic discount for each unit of energy used | those on variable tariffs receive an automatic discount for each unit of energy used |
the savings began to appear in November's bills (backdated to October) and are automatic | |
The scheme applies to all non-domestic energy customers in England, Scotland and Wales, with a parallel scheme in Northern Ireland. | The scheme applies to all non-domestic energy customers in England, Scotland and Wales, with a parallel scheme in Northern Ireland. |
Unlike domestic customers, businesses were only promised help for six months until March 2023. | |
Support for firms after this will be much less generous. | |
Under a new scheme, firms will get a discount on wholesale prices, rather than costs being capped. | |
Heavy energy-using sectors, like glass, ceramics and steelmakers, will get a larger discount than others. | Heavy energy-using sectors, like glass, ceramics and steelmakers, will get a larger discount than others. |
Firms fear ‘worst to come’ over energy bills | Firms fear ‘worst to come’ over energy bills |
What help have people already had? | What help have people already had? |
Most households are getting a one-off £400 discount on their fuel bills between October 2022 and March 2023. | |
Those in Northern Ireland are receiving a single payment of £600, more than in the rest of the UK, because of the widespread use of heating oil. | |
Eight million low-income households who get certain benefits or tax credits have received £650 in two payments. | Eight million low-income households who get certain benefits or tax credits have received £650 in two payments. |
Pensioner households got £300 and some disabled people were paid £150. | Pensioner households got £300 and some disabled people were paid £150. |
This help was being partly funded by a temporary windfall tax on oil and gas companies. | This help was being partly funded by a temporary windfall tax on oil and gas companies. |
Vulnerable families can also claim help through the Household Support Fund, and the Warm Home Discount scheme. | Vulnerable families can also claim help through the Household Support Fund, and the Warm Home Discount scheme. |
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: Help with bills | Ofgem: Help with bills |
Related Topics | Related Topics |
Energy customer switching | Energy customer switching |
Ofgem | Ofgem |
Personal finance | Personal finance |
Energy industry | Energy industry |
Cost of living | Cost of living |
Oil & Gas industry | Oil & Gas industry |
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