Consumer champion Martin Lewis recently shared a handy list of need-to-knows for all households following the announcement from new Prime Minister, Liz Truss, that energy bills for the average user will be frozen at £2,500 for the next two years.
The Prime Minister’s plan will save the average household on the standard tariff around £1,000 from October and protect billpayers from further expected rises until 2024. However, it’s worth noting that the £2,500 is not the maximum households could pay - if you use more energy, you’ll pay more and similarly, use less and you’ll pay less.
Since the announcement last week, Martin Lewis and the team at MoneySavingExpert.com (MSE) have been going through the details for the Energy Price Guarantee and the financial journalist has now shared crucial details of the daily standing charges for gas and electricity from October 1. The figures are an average estimation for now, Martin and the MSe team will publish the regional breakdown in this week’s MSE newsletter.
Posting on Twitter to over 1.7 million followers, Martin explained that paying your energy bills by Direct Debit is still the cheapest option.
Commenting on the calculations for the daly standing charges, he said: “They will also likely be a few % higher for those who use prepay or pay on receipt of bills.
“Direct Debit is still cheapest route.”
Martin continued: “This is just an average, rates are set by region. These rates only apply to homes on default standard tariffs (about 85% of homes).
“Fixes that cost more than the new price guarantee will also likely see their rates reduced. But we are still waiting for clarification on how and what happens to those on cheaper fixes.”
Daily standing charges
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
Martin added: “We're trying to get the details and when we do I'll tweet and we'll put them in our calc which u can use to see your actual change.”
Martin Lewis Energy Price Guarantee need-to-knows
Soon after the PM made her announcement in Parliament, the financial guru shared his initial observations on social media.
Martin explained:
- The new price guarantee of £2,500 for two years will start on October 1
- The current price cap is £1,971 per year for households on typical use and was due to rise to £3,549 from October 1
- This will be a cap on standing charges and unit rates - use less and you will pay less, use less you pay more - there is no total cap on what you pay. Martin advised he will publish more on this when he has the figures
- The new lower price cap includes getting rid of the green levies
- The £400 payment to all homes - a monthly discount of £66 and £67 will start from October as planned
- The monthly reduction from October takes the annual bill to £2,100 per year
- To estimate what you'll pay, over a year, Martin suggests multiplying your current costs by 6.5% (each £100 becomes £106.50) this includes the £400 discount (but not other payments)
- For those with lower than typical bills, the percentage increase will be lower, for higher users higher
Martin explained; “As the £400 payment is flat regardless of use, so has a bigger proportionate reduction on lower usage.”
- The £650 cost of living payments to those on many benefits will continue
- The £150 cost of living payment to those with disabilities and £300 to pensioners will also continue
Martin commented: “ There's no announcement on whether these payments will be in place next winter, I suspect the political reality is at least for benefits recipients, similar will be paid next year.”
- VAT is not being reduced in this announcement, but there is a chance that it may happen in the Chancellor's fiscal statement next week
- For those on (Liquified Petroleum Gas) and heating oil Liz Truss announced there would also be additional financial support.
Martin said: “I'm told there will be discretionary payments to help them too (awaiting details).
“ For those in park homes and who pay landlords directly, l'm told they should benefit from the new business help (awaiting details)"
Last week, Liz Truss also announced there will be ongoing support for the most vulnerable industries, with a review in three months’ time to decide where the help should be targeted.
The plan will see the UK Government limit the price suppliers can charge customers for units of gas, replacing the existing price cap set by regulator Ofgem.
Using tens of billions of extra borrowing, the UK Government will provide energy suppliers with the difference between the new, lower price and what they would charge were this not in place.
The £2,500 Energy Price Guarantee will apply in Scotland, England and Wales from October 1, with the same level of support made available to Northern Ireland, which has a separate energy market.
To keep up to date with the latest energy news, join our Money Saving Scotland Facebook group here or subscribe to our newsletter which goes out three times each week - sign up here.
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