Earlier in the week, before the sad news of Her Majesty the Queen’s death, the new Conservative Prime Minister, Liz Truss, announced how the Government would be supporting GB households through the energy price rise crisis.
Initially we were told that energy bills for an average household would be capped at £2,500 per annum for two years. It’s taken a few days for the actual per kWh figure to be released by the Government, but we can now share this with readers.
What follows below is from the Government Website, in their own words. The term ‘price cap’ has been replaced by ‘energy price guarantee’.
Replacing the price cap with a new Energy Price Guarantee
The Energy Price Guarantee will ensure that a typical household in Great Britain pays an average £2,500 a year on their energy bill, for the next two years, from 1st October 2022.
The consumer saving will be based on usage, but a typical household will save at least £1,000 a year (based on current prices from October). Energy suppliers will be fully compensated for the cost of the Energy Price Guarantee.
- £150 of this £1,000 a year saving will be delivered by temporarily suspending green levies. These costs will be transferred to the Exchequer, so customers don’t bear the costs, but benefit from the low-carbon electricity generation.
- This is in addition to the £400 Energy Bills Support Scheme. This will be paid in 6 instalments from October.
- The most vulnerable UK households will also continue to receive £1,200 of support provided in instalments over the year.
- An additional discretionary fund will be available for those households who are outside of the schemes. For example, households not on standard gas / electricity contracts.
How the Energy Price Guarantee will be applied to energy bills
You do not need to apply, and there’s no need to contact your energy supplier.
For consumers in England, Scotland and Wales who pay for their energy through a monthly, quarterly or other regular bill, the Energy Price Guarantee will be applied when your bill is calculated.
Because of the different energy system in Northern Ireland, and the different ways the global energy market impacts different fuel types, the Energy Price Guarantee will have to work a bit differently for some consumers. The government is working with Northern Ireland partners including the NI Utility Regulator and NI energy suppliers to ensure that equitable level of support can be delivered to consumers and businesses in Northern Ireland.
The Energy Price Guarantee limits the amount you can be charged per unit of gas or electricity, so your exact bill amount will continue to be influenced by how much energy you use
If you’re on a pre-payment meter
For GB pre-payment meter customers, the Energy Price Guarantee will be applied to the rate you pay for each unit of energy, so the money you put on the meter will last longer than would otherwise have been the case this winter.
As is the case with the ‘price cap’ under the Energy Price Guarantee there will continue to be a small difference between the unit cost for a pre-payment meter customer and other bill payers.
If you’re on a standard variable tariff
The average unit price for dual fuel customers paying by direct debit will be limited to 34.0p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1 October.
These unit prices have been passed to suppliers to ensure that they are used to calculate bills on time for 1 October.
Energy suppliers will adjust standard variable tariffs automatically. Customers on standard variable tariffs do not need to take any action to get the benefits of this scheme.
If you’re on a fixed tariff
If you’re on a fixed tariff at a higher rate caused by recent energy price rises, your unit prices will be reduced by 17p/kWh for electricity and 4.2p/kWh for gas.
These unit prices have been passed to suppliers to ensure that they are used to calculate bills on time for 1 October.
Energy suppliers will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme.
Standing charges
Average standing charges will remain in line with the levels set by Ofgem for the default tariff cap from 1 October, at 46p per day for electricity and 28p per day for gas, for a typical dual fuel customer paying by direct debit.
Support for businesses and non-domestic properties
While the majority of UK non-domestic customers are on fixed price energy deals, some are not. Businesses did not benefit from the Ofgem price cap and there was a risk that some would fall through the gap, unable to fix their energy price and unable to access the kind of support we are making available to households.
A new 6 month scheme for businesses and other non-domestic energy users (including charities and public sector organisations like schools) will be offered support as is being provided for consumers.
After this initial 6 month scheme, the government will provide ongoing focused support for vulnerable industries.
There will be a review in 3 months’ time to consider where this should be targeted to make sure those most in need get support. Further details will be published shortly.
Information correct at time of publishing. Check the Government Website for any updates.
Image: sdf rahbar under CC BY 2.0
