Energy regulator Ofgem (Office of Gas and Electricity Markets) has announced that it has made changes around the price cap.
This means that rather than being able to change very six months, it will now be able to be updated every three months.
It comes ahead of a rise in energy bills this October which has understandably led to fears with millions across the UK seeking financial help.
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Scotland’s national advice service, Advice Direct Scotland (ADS), runs the energyadvice.scot service with free, impartial and practical advice on energy bills for anyone in Scotland.
Conor Forbes, director of policy with ADS, said: “The impact of this change will be watched with interest, but what is beyond doubt is that there are some incredibly challenging months ahead for households.
“Unfortunately, bills are going to soar in October just as winter arrives – and we can expect further rises in January. The key advice to everyone in Scotland is not to struggle alone.
“Our experts at energyadvice.scot are available to provide free advice on the support and assistance available, such as grants, and we can also ensure that Scots are claiming all the benefits they are entitled to by using our free checker tool at www.advice.scot.”
With this news in mind, many people are concerned about what this means for them and their bills. Here's what you need to know.
What does 'price cap' mean, how is it calculated and why is it rising?
This refers to how much supplies can charge customers, otherwise known as 'capping' the price. It is calculated by taking into account several factors including costs suppliers face with the calculation based on a 'typical' energy usage of households.
The price cap only applies to standard and default tariffs, but not to those who are on a fixed-term energy deal. The BBC have said that prices have "risen sharply because demand for gas increased when Covid restrictions eased, and because the war in Ukraine has threatened supplies from Russia."
How much are bills set to rise by?
According to the BBC, because the cap will potentially change every three months, it expects it to go up again to £3,615 a year from January. This means bills will be reviewed four times a year, up two from twice a year.
The price cap is currently sitting at £1,971 and impacts 24 million customers across the UK with Ofgem admitting customers "face a very challenging winter ahead". Chief executive Jonathan Brearley has said that the situation is "deeply worrying", however they plan to check more frequently so customers are "only paying the real cost of their energy".
He added: "We will keep working closely with the Government, consumer groups, and with energy companies on what further support can be provided to help with these higher prices."
Ofgem have also said that "if prices were to fall from their current highs, then that would be passed on to customers more quickly, reducing their bills." However, if prices rise further then these increases will be put into place a lot quicker.
When will we find out October's price cap?
Ofgem is expected to announce what October's price cap will be on August 26. It will apply to most variable tariff energy bills from October 1, 2022 to December 31, 2022
I'm struggling with my bills, where can I can I get financial hep?
Household across the UK and Northern Ireland - including Scotland - will be given a one off discount of £400 on their fuel bills in a bid to help ease any financial stress.
This is set to happen in October and will be applied in monthly instalments over we period of six months, with a reduction of £66 in October and November, and £67 a month from December to March 2023. Those who pay by direct debit, either monthly or quarterly, or by card will see an automatic deduction off their bills. Meanwhile those with "smart" prepayment devices will see an automatic monthly top-up added to their account. This means they will have to add less credit to their meter for the total energy they use.
You can read up on how households can claim the discount here.
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