Ofgem announced the price cap will rise by 80 per cent on October 1, causing energy bills to soar.
Financial experts have warned that the UK Government's Cost Of Living Payments and the £400 energy discount is not enough help for households, with three-quarters of Scottish households expected to fall into fuel poverty.
Energy analysts also predict the price cap to jump again to a staggering increase to £5,386 in January. This comes as Russia-Ukraine conflict continues and inflation hit 10.1 per cent in July, the highest its been in 40 years.
READ MORE- Cost of Living Payment dates confirmed as energy bills set to soar in October
But what exactly is the price cap, what does it mean for your bills and what financial support is out there? Below is all you need to know.
What is the energy price cap?
The price cap is not a cap on energy bills - the price cap is regulated by Ofgem which puts a cap on how much energy companies can charge for each unit of electric and gas. If you use more energy, your energy bill will be higher than someone who doesn't use as much.
According to Ofgem, wholesale gas costs have increased by £1391 since April 2022, following the Russia-Ukraine war and concerns over supply issues, and as a result our energy bills will rise.
How much energy bills will rise if you pay Direct Debit pr Prepayment
- If you pay by Direct Debit, the standard credit cap will increase by £1,663, pushing the average energy bill to £3,549.
- Customers who pay by standard credit (cash or cheque) will pay an additional £215 with an average yearly bill of £3,764.
- Those on prepayment meters, the price cap level will put the average yearly bill to £3,608
What support is available for energy bills
Earlier this year, the UK Government announced an energy grant and cost of living payments in a bid to stake the sting out of the rising costs.
Bill payers are urged to get in touch with their energy supplier in the first instance if they are struggling to pay their bills. Some energy companies, such as British Gas offer financial support.
The British Gas Energy Support Fund will officially open on September 12 and is designed to help British Gas customers with an energy debt of between £250 and £750. Then you can apply via this website.
If you are not a British Gas customer, you can still apply for the British Gas Energy Trust which is open to anyone, no matter their supplier, who are struggling to pay their bills.
£400 energy grant
A £400 energy grant will be issued in installments, with the first payment being issued in October. This does not have to be re-paid.
Energy suppliers will deliver the support from October and this will be added to your energy account - not bank account.
Direct debit and credit customers will have the money credited to their account, while customers with pre-payment meters will have the money applied to their meter or paid via a voucher.
£650 one-off payment
There will be a one-off payment of £650 to people who receive DWP benefits. The payment will be made in two instalments, one in July and one in October.
The money will go direct to recipients of Universal Credit, Income-based Jobseekers Allowance, Income-related Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit, and Pension Credit.
£200-300 for pensioners with Winter Fuel Payment
Pensioner households that receive the Winter Fuel Payment will get a top up of between £200 and £300 in November and December.
The payment will be made on top of other payments that the recipient is entitled to.
£150 for those claiming disability benefits
A one off payment of £150 will be given to those claiming disability benefits, or had already begun an eventual successful claim as of May 25 2022. This is on top of the £400 energy discount.
Anyone who is claiming Disability Living Allowance, Personal Independence Payment, Attendance Allowance, Scottish Disability Benefits, Armed Forces Independence Payment, Constant Attendance Allowance and War Pension Mobility Supplement will get the top-up.
It will also be given on top of the £650 if they also claim other benefits as mentioned above.
As well as the cost of living grants, there may be other options available if you qualify.
Home Heating Support Fund
The Home Heating Support Fund is working with the Scottish Government to help people facing financial difficulties.
The scheme has been extended until March 31 2023, or until funds have been exhausted.
Warm Home Discount Scheme
The Warm Home Discount Scheme: offers eligible households a one-off discount of £140 to their energy bill.
There are 2 ways to qualify for the Warm Home Discount Scheme:
- You get the Guarantee Credit element of Pension Credit - known as the ‘core group’.
- You’re on a low income and meet your energy supplier's criteria for the scheme - known as the ‘broader group’.
How you apply for the Warm Home Discount Scheme depends on how you qualify for the discount.
Low Income Winter Heating Assistance
The Low Income Winter Heating Assistance is a new benefit that will replace the UK Government's Cold Weather Payment.
If the average temperature in your area falls below zero degrees Celsius over a seven day period (between November and March), eligible individuals receive a Cold Weather Payment of £25 (per seven day period) to put towards fuel costs.
Replacing that will be a guaranteed annual winter heating benefit of £50 will be paid for the first time in February 2023 to around 400,000 low income households.
Winter Fuel Payment
You qualify for a Winter Fuel Payment if both the following apply:
- You were born on or before 25 September 1956.
- You lived in the UK for at least one day during the week of 19 to 25 September 2022 - this is called the ‘qualifying week’.
You will get your Winter Fuel Payment automatically (you do not need to claim) if you’re eligible and either get the State Pension or get another social security benefit (not Housing Benefit, Council Tax Reduction, Child Benefit or Universal Credit).
How much you will receive depends on your circumstances.
Child Winter Heating Assistance
To help families with disabled children, there is a payment of £200 to go towards the cost of heating.
You do not need to apply for Child Winter Heating Assistance if the child currently lives in Scotland.
If the child or young person is eligible, you'll be paid automatically into the same account that your Disability Living Allowance for children is paid into.
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