What is the energy price cap? What it means for YOUR bills – explained

Energy bills for UK households to increase by £139

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

Cabinet minister and President for COP26, Alok Sharma, revealed the Government is considering lifting the energy price cap to stop soaring prices sending gas firms into administration. Business Secretary Kwasi Kwarteng held crisis talks with industry bosses on Monday and an official announcement is expected this week. But how will this affect properties across the UK?

What is the energy price cap?

The energy cap is the maximum price suppliers can charge customers on a standard – or default – tariff.

Currently, energy suppliers are facing an enormous surge in prices they have to pay to get access to the gas they supply to households.

This year alone, the price of gas has risen by 250 percent.

A worldwide squeeze on gas and energy supplies has led to this exponential rise, caused in part by cold winters and an increase in demand from Asia.

From August alone, the cost of gas has soared by a shocking 70 percent.

Energy firms now face going bust unless the energy cap can be raised.

If this happens, suppliers will be able to put prices up to the new maximum and – given the rise in gas prices – they probably will.

What would this mean for the billpayer?

About 15 million households in England, Wales and Scotland face a 12 percent rise in their energy bills from October.

In Northern Ireland, which is a separate market with two suppliers, prices will also rise next month – by 21.8 percent (SSE) and 35 percent (firmus).

This means:

  • Those on standard tariffs could see an increase of £139, from £1,138 to £1,277 a year
  • People with pre-payment meters could see an increase of £153, from £1,156 to £1,309
  • Households on fixed tariffs will be unaffected, but those coming to the end of a contract will probably be unable to find a cheap deal to replace it

What should you do?

If your energy provider collapses, you will not stop receiving gas and electricity.

Your account will be moved to a new supplier by the energy regulator Ofgem – although this may take a few weeks.

Unfortunately, you may end up on a more expensive tariff if you are switched to a new supplier.

Citizens Advice recommends making a note or taking a photo of your meter reading and downloading any bills while you wait for your new supplier to contact you.

There is no need to cancel any direct debits straight away, says Citizens Advice.

Instead, you can wait for your new account to be set up before cancelling the existing payment.

If you are in credit, your money is protected and you’ll be paid back. If you were in debt to the old supplier, you’ll still have to pay the money back to your new supplier instead

Source: Read Full Article