Newly elected Prime Minister Liz Truss announced energy prices will be capped at £2,500 from October.
In August, energy regulator Ofgem unveiled that the price cap would rise from £1,971 to £3,549, but the new Prime Minister has said that will now not happen.
The price cap is the maximum price that energy companies can charge households for each unit of gas and electricity they use. The unit is known as a kilowatt hour or kWh.
How much will I pay?
It is estimated that a typical household uses 12,000 kWh (kilowatt hours) of gas a year, and 2,900 kWh of electricity a year. The cap means that your annual energy bill will not rise above £2,500 from October for a typical household verses your energy bill. Without the Government intervening and setting the new price cap, that same annual bill would have been £3,549 a year. Last winter, it was £1,277 a year.
Will this affect me?
The energy price cap will apply to you if you are on a variable or default tariff, whether you pay by direct debit, standard credit or use a pre-payment meter. It is expected to affect 24 million homes across England, Scotland and Wales.
A small percentage of households are on a fixed-term energy tariff (a tariff with a fixed end date) or a standard variable green energy tariff. If you’re on this type of tariff and it is at a higher rate caused by the recent energy price rises, your unit prices will be reduced by 17p/kWh for electricity and 4.2p/kWh for gas. These unit prices have been passed to suppliers to ensure that they are used to calculate bills on time for 1 October.
Energy suppliers will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme however, if you fixed within the last 14 days, you still have a right to cancel without any penalties or charges.
When will this price increase happen?
The cap of £2,500 will apply from 1 October 2022 and will last for two years (until the next election in 2024).
How is this being funded?
The Government is borrowing the money and compensating energy firms for the difference between the wholesale price for gas and electricity they pay and the amount they can charge customers. This is all being added to the national pot and the Prime Minster will be making further announcements on how these costs will be met later this month.
What about the £400 energy discount we were all promised?
This will still go ahead. The £400 discount will be administered by energy suppliers (not Karbon) and will be paid to customers over six months, with payments starting from October 2022, to ensure households receive financial support throughout the winter months.
How will Karbon support me?
Lee Forrest, manager of the Money Matters Team at Karbon Homes, said: “We are committed to supporting all of our customers throughout this cost of living crisis.
“Although the Prime Minister’s announcement is a step in the right direction to tackle soaring energy costs, I am still deeply concerned how this will still affect our more vulnerable and low income families this winter.
“Setting the cap at £2,500 is fine if you’re already paying close to that figure but those who are not, are likely to see their annual energy bills increase and it could push even more families into crisis.
“At Karbon, we’ve set up a working group to support customers and I encourage anyone still worried about what today’s announcement means for them to contact us.”
Karbon’s Money Matters Team are experts in benefits and money advice and help customers to manage bills and budgeting, pay rent and access government grants and discounts. For free, independent support, please call the Money Matters Team on 0800 164 0111 or email moneymatters@karbonhomes.co.uk
Newly elected Prime Minister Liz Truss announced energy prices will be capped at £2,500 from October.
In August, energy regulator Ofgem unveiled that the price cap would rise from £1,971 to £3,549, but the new Prime Minister has said that will now not happen.
The price cap is the maximum price that energy companies can charge households for each unit of gas and electricity they use. The unit is known as a kilowatt hour or kWh.
How much will I pay?
It is estimated that a typical household uses 12,000 kWh (kilowatt hours) of gas a year, and 2,900 kWh of electricity a year. The cap means that your annual energy bill will not rise above £2,500 from October for a typical household verses your energy bill. Without the Government intervening and setting the new price cap, that same annual bill would have been £3,549 a year. Last winter, it was £1,277 a year.
Will this affect me?
The energy price cap will apply to you if you are on a variable or default tariff, whether you pay by direct debit, standard credit or use a pre-payment meter. It is expected to affect 24 million homes across England, Scotland and Wales.
A small percentage of households are on a fixed-term energy tariff (a tariff with a fixed end date) or a standard variable green energy tariff. If you’re on this type of tariff and it is at a higher rate caused by the recent energy price rises, your unit prices will be reduced by 17p/kWh for electricity and 4.2p/kWh for gas. These unit prices have been passed to suppliers to ensure that they are used to calculate bills on time for 1 October.
Energy suppliers will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme however, if you fixed within the last 14 days, you still have a right to cancel without any penalties or charges.
When will this price increase happen?
The cap of £2,500 will apply from 1 October 2022 and will last for two years (until the next election in 2024).
How is this being funded?
The Government is borrowing the money and compensating energy firms for the difference between the wholesale price for gas and electricity they pay and the amount they can charge customers. This is all being added to the national pot and the Prime Minster will be making further announcements on how these costs will be met later this month.
What about the £400 energy discount we were all promised?
This will still go ahead. The £400 discount will be administered by energy suppliers (not Karbon) and will be paid to customers over six months, with payments starting from October 2022, to ensure households receive financial support throughout the winter months.
How will Karbon support me?
Lee Forrest, manager of the Money Matters Team at Karbon Homes, said: “We are committed to supporting all of our customers throughout this cost of living crisis.
“Although the Prime Minister’s announcement is a step in the right direction to tackle soaring energy costs, I am still deeply concerned how this will still affect our more vulnerable and low income families this winter.
“Setting the cap at £2,500 is fine if you’re already paying close to that figure but those who are not, are likely to see their annual energy bills increase and it could push even more families into crisis.
“At Karbon, we’ve set up a working group to support customers and I encourage anyone still worried about what today’s announcement means for them to contact us.”
Karbon’s Money Matters Team are experts in benefits and money advice and help customers to manage bills and budgeting, pay rent and access government grants and discounts. For free, independent support, please call the Money Matters Team on 0800 164 0111 or email moneymatters@karbonhomes.co.uk
More news
First phase of affordable homes at Seaham Garden Village gets underway
At Home with Karbon summer edition has landed
Hello! A very warm welcome to the summer edition of At home with Karbon, where you’ll find engaging stories and helpful information.