The Energy Price Guarantee will come into force for households this weekend, in the Government’s effort to give much-needed support amid the cost of living crisis.
The new guarantee, which sees bills capped at £2,500 a year for a typical household over the next two years, will replace the Ofgem price cap which many feared they would not be able to afford as prices were due to top £3,500. While the guarantee is lower than Ofgem’s cap, the average bill is still £1,000 more than families were paying this time last year, The Mirror reports .
Following Prime Minister Liz Truss ’ announcement of the energy bills cap, many bill payers have raised questions about what the new guarantee means for them. From how it works on fixed rate deals to what it means for the promised £400 energy bills discount, here’s everything you need to know about the changes coming into force on October 1.
READ MORE: Martin Lewis explains mini-budget ‘gain’ for people earning less than £50,000
Will my energy bill be capped at £2,500?
The £2,500 figure is only used to demonstrate what the average household in the UK will pay for energy under the new guarantee, so your annual bill could still end up being higher than this amount. As Martin Lewis explained last week , the cap applies to the standing charge and unit rates for gas and electricity.
Here are the average unit rates for dual-fuel customers paying by direct debit:
Electricity
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Unit rate: 34.00p per kWh
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Standing charge: 46.36p per day
Gas
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Unit rate: 10.30p per kWh
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Standing charge: 28.49p per day
How does it work if I’m on a fixed deal?
The price reduction for energy will also apply to most fixed rate deals from October 1, meaning a discount of 4p/kWh for gas and 17p/kWh for electricity. This will only apply to fixed deals that are more expensive than the Energy Price Guarantee - so you could find that your bill is higher than the guarantee depending on how much you pay now and if your deal is an expensive one.
If you would pay less than the Energy Price Guarantee within your fixed deal, the discount won’t be applied. If you are on a mid-range fix, then your bill should be lowered to match the guarantee.
If you find that your fixed deal will be more expensive, most energy firms will allow you to switch without having to fork out on any exit fees in an agreement that should apply until at least November 15 - be sure to check with your provider. British Gas, Ovo (SSE), Octopus, EDF, E.on, Shell and Scottish Power are all offering this option.
Will I still get the £400 energy discount?
It has been confirmed that households will still receive £400 off their energy bills on top of the Energy Price Guarantee being introduced. This discount will be applied to your energy bills over the course of six months starting from October.
Households will receive £66 off their bill in October and November, then £67 per month from December until March. Whether the scheme will continue beyond next spring is yet to be confirmed.
If you pay your energy bills by direct debit, you will receive the discount automatically each month as a deduction to your bill or a refund to your bank account. Those who pay on receipt of their bill will get their discount via credit to their energy account, while prepay customers will be sent discount vouchers by text, email or post.
Do I still get the discount if I’m a ‘bills included’ renter or in a park home?
There were concerns that some people in particular living situations would miss out on the energy bills support. But those living in caravan parks or on ‘shared heat networks’ in flats will also receive £400 as a one-off payment, if they were not already eligible for the £400 discount.
For tenants who pay their energy bills to their landlords, there will be legislation put in place to ensure that landlords pass on the £400 discount to their renters. People who live off the gas grid, relying on heating oil, will also get an extra £100 one-off payment on top of the £400 electricity bills discount.
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