Energy bills will be capped at £2,500 a year for a typical household from this weekend.
The new Energy Price Guarantee will come into force from October 1 for two years - replacing the Ofgem price cap.
It means households won’t face the hideous energy rises that were expected to come this winter and into 2023 - with the Ofgem price cap having been due to reach £3,549.
But the new Energy Price Guarantee is still above the current £1,971 price cap - and is more than £1,000 higher than what families were paying a year ago.
Here is everything you need to know about the Energy Price Guarantee.
Is £2,500 the maximum I will pay for energy?
No - much like the old Ofgem price cap - there is no actual cap on your energy bills.
What the Energy Price Guarantee will do, is limit the unit rates of gas and electricity, along with the standing charge.
This means if you use more energy, you could end up paying more than £2,500 - this figure is just used to illustrate a typical household.
Similarly, use less energy and your bill should be less.
Here are the average unit rates for dual-fuel customers paying by direct debit:
Electricity
- Unit rate: 34.00p per kWh
- Standing charge: 46.36p per day
Gas
- Unit rate: 10.30p per kWh
- Standing charge: 28.49p per day
I'm on a fixed deal - how does this affect me?
The same unit rate reduction will apply to most fixed rate deals from October 1 - so that means a discount of 4p/kWh for gas, and 17p/kWh for electricity.
The reduction will only apply to fixes that will be more expensive than the Energy Price Guarantee - so how much of an impact this has on your bills depends on what you're paying now.
For example, for someone who fixed into an expensive energy deal, you may find your bill is higher than the Energy Price Guarantee.
If your fix will be more expensive, Martin Lewis has confirmed that most energy firms - British Gas, Ovo (SSE), Octopus, EDF, E.on, Shell and Scottish Power - will allow customers to move with no early exit penalties.
This should apply until at least November 15 although some will allow you to switch beyond this - be sure to check.
If you'll pay less than the Energy Price Guarantee, then the discount won't be applied to your fix.
Or if you picked a medium-level fix, then your bill should be lowered to match the new Energy Price Guarantee.
Will I still get the £400 energy discount?
Yes - it has been confirmed that the £400 energy discount is still going ahead and is on top of the £2,500 figure.
The rebate will be paid starting from October, spread out over six months - you'll get £66 off your bill in October and November, then £67 from December 2022 to March 2023.
At the moment, there has been no confirmation as to whether this will carry on beyond this. The Energy Price Guarantee will be in place for two years.
How you get the discount depends on how you pay for your energy, as well as which supplier you're with.
Direct debit customers will receive the discount automatically - it will be applied either as a deduction to your monthly direct debit, or as a refund to your bank account.
If you pay on receipt of your bill, the discount will come as a credit to your energy account each month.
Smart prepayment meter customers will also receive the discount automatically each month.
If you're a prepay customer, you will be sent discount vouchers by text, email or post - you'll then need to manually redeem these.
What about people in park homes - and renters paying 'all-in'?
People in caravan parks or on "shared heat networks" in flats will be given a £400 one-off payment, if they weren’t eligible for the £400 discount already.
Park home residents typically pay for their electricity directly to the park owner, sparking fears that some people would miss out on the support.
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.
There will also be legislation to ensure landlords pass on the £400 discount to tenants who pay their electricity as part of an "all included" rent package.
Are there scams I should be aware of?
Like with previous cost of living support, criminals are taking advantage of the most vulnerable by sending out scam texts.
In some cases, people have been asked set up a direct debit to receive the money - but you don't need to do this, as the £400 will be applied automatically.
Some examples of texts being sent by scammers come with the sender name “UK Help”.
Others pretend to be from the Government or Ofgem, and they normally ask people to click a link to apply for energy bill support.
You will never be asked to provide your bank details to get the £400 energy discount - so don't click on any link you're not sure of.
