What is the energy price guarantee and does it replace the price cap? | The Sun

ENERGY bills will be frozen at £2,500 for the average household from October 1, Prime Minister Liz Truss has announced.

The Energy Price Guarantee will replace the existing price cap, which was set to rise to £3,549 in just a few weeks time.

But today, the new PM set out measure to help households and business deal with soaring energy bills.

Today, she announced:

  • A two year price freeze on bills, saving households £1,000
  • Support for businesses for at least six months
  • Households will still get the £400 rebate on bills this winter
  • Millions excluded by the price cap to get support from a new fund

It means a typical family will pay no more than £2,500 a year for their energy bills for the next two years, saving households £1,000 a year on average.

However, the cap is just on what firms can charge customers. Your bill could be higher, based on your energy usage.

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This will save families around £1,000 a year.

This will be in addition to the £400 energy bill discount that more than 29 million households will get next month.

The discount will be automatic and will be made up of six instalments, starting from October.

But millions of households will still be entitled to thousands of pounds in additional support.

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The amount of financial help you'll be eligible for depends on your circumstances – but every household will get a discount on their energy bills.

Millions of households on Universal Credit and legacy benefits will have already received the first half of the £650 cost of living payment.

The energy bill support on offer was first announced by former chancellor Rishi Sunak back in May.

The Sun has put together a guide to all the energy bill help available worth up to £2,575.

Today, the Prime Minister announced:

  • A two year price freeze on bills, saving households £1,000
  • Support for businesses for at least six months
  • Households will still get the £400 rebate on bills this winter
  • Millions excluded by the price cap to get support from a new fund

What is the energy price guarantee?

The energy price guarantee will hold average household bills to no more than £2,500 from October 1.

The Prime Minister’s two-year plan will save the average household around £1,000 from October and protect billpayers from further expected rises over the coming months.

The plan will see the Government limit the price suppliers can charge customers for units of gas, replacing the existing price cap set by regulator Ofgem.

What is the energy price cap?

The energy price cap sets a limit on the unit price and standing charge that companies can bill their customers.

The cap is based on wholesale prices over a six month period.

It was set to soar to £3,549 on average per year from October 1.

But the energy price guarantee will replace this – and bills will be frozen at £2,500 for the typical household.

It only means firms will be limited on what they charge customers. You pay for how much energy you use, so your bill could be higher than £2,500 a year.

The price cap affects roughly 22million people on default or standard tariffs offered by the country's energy providers, according to Ofgem estimations.

An increasing number of energy users are on the price cap as there are limited fixed deals left out there on the market.

The price cap was originally set up in January 2019 by Ofgem, in a bid to limit how much providers can charge on default energy bills to spare Brits from being unfairly charged.

It has soared to eye-watering heights this year due to the energy crisis.

What help is already available?

From September the second, one million people receiving tax credits started to receive the first half of the £650 cost of living payment.

The money will be paid in the same way you usually get your tax credits.

And from September 20, over six million people with disabilities are set to receive £150 to help with the rising cost of living.

From October the first, all UK households are set to receive the £400 energy bills rebate.

The payment will be made up of six discounts between October and March next year.

Households will receive a £66 energy bill discount in October and November and a discount worth £67 in December, January, February and March.

We've listed how the leading energy suppliers plan to pay households the discount and are waiting on others to respond.

The way you'll be paid will depend on how you pay for your energy.

If you're on a credit meter the discount will come off your bills, but if you're on a prepayment meter you'll get a voucher.

Check with your supplier to confirm how you'll receive the cash.

In November, a £300 one-off "Pensioner Cost of Living Payment" will be paid out to eight million households.

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