Energy Price Guarantee kicks in to protect consumers from rising costs

The government’s two-year cap limits the amount suppliers can charge for each unit of gas and electricity used by a household in the UK, as well as the standing charge

Big Zero Report 2022

A new cap aimed at protecting consumers from rising energy prices has now kicked in.

The government’s two-year Energy Price Guarantee limits the amount suppliers can charge for each unit of gas and electricity used by a household in the UK, as well as the standing charge.

The average unit price for dual fuel customers paying by direct debit on variable deals is limited to 34p per kilowatt hour (kWh) for electricity and 10.3p per kWh for gas.

When standing charges are added, a typical household – using 12,000 kWh of gas a year and 2,900 kWh of electricity a year – will not pay more than £2,500 a year for energy.

The average bills under Ofgem’s price cap, had it come into effect today, would have reached almost £3,550 a year – a rise of 80% on current bills – and increased to around £5,400 in January 2023 and higher in April 2023.

Households will also see the first instalment of the £400 Energy Bill Support Scheme in their October electricity bill, which will automatically be applied monthly in six instalments until March 2023.

Consumers are being urged to stay alerts to scams and fraudulent messages as they do not have to apply for the schemes.

Households in Northern Ireland will also receive the same support through the Energy Price Guarantee from November, with support for October bills backdated so they see the same benefit overall.

Those who might live in an area of the UK that is not served by the gas grid or use alternative fuels, such as heating oil to heat their home, will receive a £100 payment to support them with their energy bills.

Prime Minister Liz Truss said: “I know people across the country are anxious about their energy bills, which is why we have acted quickly to help them.

“Livelihoods and businesses were at stake. The government’s energy support limits the price they pay for gas and electricity, shields them from massive bill increases, and is expected to curb inflation too.

“The cost of not acting would have been enormous. To make sure the British public is not left in this position again, we are also fixing the problem at its source by scaling up home-grown energy and reducing reliance on foreign supplies to boost our energy security and independence.”

British businesses, charities and public sector organisations will also be protected through the Energy Bill Relief Scheme over the next six months – equivalent to the Energy Price Guarantee put in place for households and similarly discounts price per unit of gas and electricity.

The move is expected to lead to businesses paying wholesale energy costs “well below half of expected prices” for this winter.

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