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What is the energy price cap and how much are gas and electricity bills going up? | What is the energy price cap and how much are gas and electricity bills going up? |
(10 days later) | |
Gas and electricity prices will rise by 10% in England, Scotland and Wales on Tuesday, 1 October. | |
Under the new energy price cap, the typical annual dual-fuel bill paid by direct debit will be £1,717 per year. | Under the new energy price cap, the typical annual dual-fuel bill paid by direct debit will be £1,717 per year. |
Despite the increase, around 10 million pensioners will no longer get winter fuel payments to help them with bills at the coldest time of year. | |
What is the energy price cap and how is it changing? | |
The energy price cap covers 28 million households in England, Wales and Scotland and is set every three months, external by the energy regulator Ofgem. | The energy price cap covers 28 million households in England, Wales and Scotland and is set every three months, external by the energy regulator Ofgem. |
It fixes the maximum price that can be charged for each unit of energy on a standard - or default - tariff for a typical dual-fuel household which pays by direct debit. | It fixes the maximum price that can be charged for each unit of energy on a standard - or default - tariff for a typical dual-fuel household which pays by direct debit. |
Between 1 October and 31 December, gas prices will be capped at 6.24p per kilowatt hour (kWh), and electricity at 24.50p per kWh. | Between 1 October and 31 December, gas prices will be capped at 6.24p per kilowatt hour (kWh), and electricity at 24.50p per kWh. |
That means a dual-fuel direct debit household using a typical amount of energy, external will pay £1,717 per year, a rise of £149. | |
Those who pay their bills every three months by cash or cheque will pay £1,829. | |
The economic forecaster Cornwall Insight, which tracks the energy market, has suggested prices could rise again in January, due to of rising wholesale costs paid by suppliers. | |
The cap does not apply in Northern Ireland, which has its own energy market. | The cap does not apply in Northern Ireland, which has its own energy market. |
What is a typical household? | What is a typical household? |
Your energy bill depends on the overall amount of gas and electricity you use, and how you pay for it. | |
The type of property you live in, how energy efficient it is, and how many people live there, are also relevant. | The type of property you live in, how energy efficient it is, and how many people live there, are also relevant. |
The Ofgem cap is based on a "typical household" using 11,500 kWh of gas and 2,700 kWh of electricity a year with a single bill for gas and electricity, which they settle by direct debit. | |
The vast majority of people pay their bill this way to help spread payments across the year. | |
Those who pay every three months by cash and cheque are charged more. | Those who pay every three months by cash and cheque are charged more. |
In March, Ofgem said it was considering a range of options for changing the current energy cap system, including charging different prices throughout the day to reflect periods of high demand. | In March, Ofgem said it was considering a range of options for changing the current energy cap system, including charging different prices throughout the day to reflect periods of high demand. |
It has not yet published any conclusions. | |
What is happening to prepayment customers? | What is happening to prepayment customers? |
From 1 October, households on prepayment meters will pay slightly less than those on direct debit, with a typical bill of £1,669, a rise of £147. | |
About four million households had prepayment meters in April 2024, according to Ofgem. | About four million households had prepayment meters in April 2024, according to Ofgem. |
Many have been in place for years, but some were installed more recently after customers struggled to pay higher bills. | Many have been in place for years, but some were installed more recently after customers struggled to pay higher bills. |
New rules mean suppliers must give customers more opportunity to clear their debts before switching them to a meter, and they cannot be installed at all in certain households. | New rules mean suppliers must give customers more opportunity to clear their debts before switching them to a meter, and they cannot be installed at all in certain households. |
What are standing charges and how are they changing? | What are standing charges and how are they changing? |
Although the overall cap has fallen since the highs seen in 2022-23, standing charges - a fixed daily amount which covers the costs of connecting to a supply - have not dropped. | |
These are typically 60p a day for electricity and 31p a day for gas, although they vary by region. | These are typically 60p a day for electricity and 31p a day for gas, although they vary by region. |
Campaigners, including the financial journalist Martin Lewis, have said these charges are unfair because they make up a disproportionately large part of the bill of low energy users. | Campaigners, including the financial journalist Martin Lewis, have said these charges are unfair because they make up a disproportionately large part of the bill of low energy users. |
Ofgem has outlined options to change the standing charge billing system and asked energy suppliers, consumer groups and household bill payers to give their views., external | |
This consultation closed on 20 September. | |
Separately, the regulator is also adding £28 to everyone's bill between April 2024 and March 2025 to cover the cost of dealing with £3.1bn of debt that customers owe to suppliers. | |
Should I fix my energy prices? | Should I fix my energy prices? |
Fixed-priced deals offer certainty for a set period, but if prices drop, people could find themselves stuck at the higher price. | |
When considering fixed-price deals, Ofgem says people should seek independent advice and consider what is most important for them - the lowest price or the security of a fixed deal. | When considering fixed-price deals, Ofgem says people should seek independent advice and consider what is most important for them - the lowest price or the security of a fixed deal. |
Price comparison website Uswitch warns customers to check whether fixed deals have exit fees before signing up and ensure they fully understand the terms of the contract. | |
They should also look closely at forecasts, to help decide whether a fixed deal makes sense. | |
What is happening to the winter fuel payment? | |
Changes to the winter fuel payment mean more than 10 million pensioners will not receive the money this winter. | |
Previously, it was paid to all pensioners to help with their energy bills during the coldest part of the year. | |
But in July, the government said future payments would be made only to those on low incomes who received certain benefits, including pension credit. | |
This year's payment - worth £200 or £300 depending on individual circumstances - will be paid automatically to eligible pensioners in November or December. | |
How much is the winter fuel payment and who can still get it? | |
How much is the winter fuel payment and who can still get it? | |
What other help can I get with energy bills? | |
The £500m Household Support Fund,, external which was introduced in September 2021 to help vulnerable customers, had been due to end in autumn 2024. | |
However, Work and Pensions Secretary Liz Kendall has extended this until March 2025. | |
The Warm Home Discount scheme, external continues to offer a discount to eligible pensioners and low income households. | The Warm Home Discount scheme, external continues to offer a discount to eligible pensioners and low income households. |
The government's Fuel Direct Scheme, external can help people to repay an energy debt directly from their benefit payments. | The government's Fuel Direct Scheme, external can help people to repay an energy debt directly from their benefit payments. |
In addition, suppliers must offer customers affordable payment plans or repayment holidays if they are struggling with bills. | In addition, suppliers must offer customers affordable payment plans or repayment holidays if they are struggling with bills. |
Most suppliers also offer hardship grants. | Most suppliers also offer hardship grants. |
What can I do if I can't pay my energy bill? | What can I do if I can't pay my energy bill? |
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, external | Ofgem: Help with bills, external |
Ofgem: Help with bills, external | Ofgem: Help with bills, external |
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 |
The world explained | The world explained |
Oil & Gas industry | Oil & Gas industry |