What does the Energy Price Guarantee mean for me?
A typical UK household will now pay ‘no more than’ £2,500 a year for their energy for the next two years from October 1.
Prime Minister Liz Truss has announced that the typical UK household will pay no more than £2,500 a year for energy for the next two years from October 1 as the Government responds to soaring gas and electricity prices.
Without intervention, the average household energy bill would have jumped 80% from October 1, from the current £1,971 to £3,549 a year under Ofgem’s latest price cap.
Ms Truss has announced that a new Energy Price Guarantee will supersede the existing price cap until 2024, the year the next general election is expected.
It will apply to all households in Great Britain, with the same level of support made available to those in Northern Ireland.
– What is the price cap?
The energy price cap was introduced in January 2019 and is set by regulator Ofgem to determine the amount energy suppliers can charge customers on their standard variable tariffs.
Now set quarterly, Ofgem dictates the price that households pay for every unit of gas and electricity they use, based on wholesale prices. It also includes allowances for tax, charges paid to the energy networks, green levies and social payments.
The cap is quoted in the form of the average annual household bill. Currently, it is £1,971, and was set to rise to £3,549 in October.
Instead, Ms Truss is to effectively freeze the cap at £2,500 – saving households more than £1,000.
