Energy Bills capped at £2500 a year - for the average household (subject to usage)

[BecauseICan22]

Truss has just announced this.

Here's what the average household uses, so you can work it out from that.

Most people will be relieved, and rightly so, but the fun part will come in the next few weeks when the chancellor starts letting us in on how this is being paid for.

I am guessing it to be around 25% more than the current cap which would take my estimated monthly from 377 a month to 471 a month from October (unless I can get my usage down which I am working on!).

They can’t just publish a single figure because regional rates vary slightly.

So the current cap is £1900 so the price will go up by about 25% on today's prices? Is that a fair assessment?

As opposed to doubling in October?

I was paying £150 odd a month for both fuels and have just increased my monthly DD to £200 so if I use the same as last year I should be about covered.

Ha cross posted with Hydrangeatea

Yup that's about how I see it

🤦🏻‍♀️ No. It’s a cap on how much they can charge per unit of energy. Same as it’s always been. The 2.5k figure is just based on what the average U.K. household will use at the new cap rate. If you use more you’ll pay more

I need unit prices to work out if I need to exit my fixed price contract.

Why can't they just announce that it the second line

Apparently ofgem's "typical household" is 2.4 people. I've tried to find this on Ofgem's site, but can only find breakdowns of the various types of average household, not one overall average.

Pointing this out as I misread it first time I saw it and thought it was 2.4 children (as in, the average amount of children). Weird that they are both 2.4

They usually publish average figures and then the regional variations are around that figure. E.g. the figures for October were going to be as follows

The unit price will be capped so that "average" energy usage will cost £2,500 a year. If you use more than the average, you'll pay more.

Someone on another thread explained it better than I can by saying imagine it's apples, and they've capped the price of apples at £1 an apple. If you use more apples, you'll pay more in total. But you won't pay more than £1 an apple. It's absolutely not that you'll get to £2,500 of bills and then it's free.

Absolutely dreadful how they have framed this.
People are going to be so confused.

Yes, cap is a dreadful misnomer and it's going to result in a lot of angry/desperate people when the bills finally arrive.

So if it's a 25% increase that would be about 34p for electricity and 9p for gas?

Two years takes us up to the next election.....very convenient timing don't you think?

I was paying £150 odd a month for both fuels and have just increased my monthly DD to £200 so if I use the same as last year I should be about covered

although I thought the price cap was £1900 this time last year and it appears it wasn't, so I will probably still need to increase my DD more or use less or both.

This is a useful explainer: twitter.com/MartinSLewis/status/1567829040102342656

Can someone explain the economics of this to me please? When it says, funded by the tax payer, does this mean that we can only be charged (for example) 30p per kwh, but if the wholesale price plus profit is 50p per khw then the tax payer pays the difference for the amount the country actually uses?

From Martin Lewis

She's literally just admitted that it's been a failure of the Tory government policy for the last decade that has led us to be in this situation, yet in the same breathe now claims they'll magically be able to fix it all. Why do so many still fall for this shit every time???

The tories don't need opposition anymore. They can just blame the last lot even when they were the last lot. It's genius, really.

Are will still getting the £400?
My bills (not fixed) are currently only £60 a month. The £400 plus the £150? already received were going to be. big chunk a whole year.

Not worried for me but lots of my neighbours are on very low incomes and a price cap of £2500 helps much less than the previous measures.

It's so misleading

From an article

"This guarantee, which includes a temporary suspension of green levies, means that from 1 October a typical household will pay no more than £2,500 per year for each of the next two years while we get the energy market back on track.

I can see why though. Without businesses (current and new), there will.be a lot less jobs, meaning more financial strain on families and the already struggling welfare system as it is

I don't know why they can't just say that the unit price is capped.

People on water caps means that they can't be charged over X amount even if they use more than X worth, so it could confuse those people, and others.

For those of us who fixed, will it be October 1st we can move back onto the standard variable, or can we do it now?