From 1 July 2023, energy prices will be set by Ofgem’s price cap. Annual energy bills for a typical household will be around £2,074, down from £2,500. Read more about the July price cap here.
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Prime Minister Liz Truss has today announced a new ‘Energy Price Guarantee’ which supersedes the October price cap.
The guarantee will limit the amount that energy bills can go up by for households and businesses. It is part of a package of measures to ease the cost-of-living crisis.
Under the scheme, from 1 October, a typical household in England, Scotland and Wales will pay up to an average of £2,500 a year on their energy bill until 2024.
This is around £1,000 less than typical households would have paid a year if the October price cap been implemented.
The scheme will run in addition to the Energy Bills Support Scheme which will see all households getting £400 discount off their energy bill as well as further support for more vulnerable groups.
The UK Government will compensate suppliers for the difference between the wholesale price for gas and electricity they pay and the amount they can charge customers.
This will be funded in part by temporarily removing green levies from consumer electricity bills, worth about £150 a year on average from household bills.
Businesses – including schools, hospitals and charities – will also get support, with bills capped for six months.
An equivalent scheme is expected to follow in Northern Ireland.
Mike Thornton, chief executive of Energy Saving Trust, said:
“The scale of the emergency measures announced today serves to further highlight the depth and breadth of the energy crisis. We welcome the resolve to take immediate action to reduce costs and increase energy security for both the short and long term, whilst remaining committed to net zero carbon emissions by 2050.
“The freeze on energy costs will give a welcome reprieve for many households and businesses concerned about paying their bills this winter. However, we need more detail on what targeted support will be available for the most vulnerable, as hundreds of thousands still risk being plunged into fuel poverty with bills set to rise further. We also need urgent clarity on what support will be available to those who are off the gas grid and use fuels such as oil to heat their home.
“We welcome the promised acceleration in deployment of renewable energy to help increase security of supply. However, our continued over reliance on fossil fuels is the catalyst for high costs, energy insecurity and a warming planet. The commitment to further fossil fuel extraction is therefore concerning and a step in the wrong direction, it is not the solution to the problems we face.
“We also still need to see greater and more urgent investment in the roll out of energy efficiency measures across UK homes. A commitment that was notably absent from this announcement and is the fastest way to permanently reduce energy demand, cut costs and slash emissions whilst keeping people warm and safe. It must be made a much higher priority.
“This new government has a real opportunity to make energy in the UK cheaper, greener and more secure. It is vital that they deliver.”