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

[BecauseICan22]

Truss has just announced this.

Sounds like it’s double last year so usage will still go down

There is the cash payment already given for lowest incomes which bridges the gap, not sure about the £400

I am just relieved that I can continue with my already conservative approach to consuming energy, as the much smaller increase to the unit price should be manageable. In the two year window we have I will look at longer-term energy saving measures, e.g. replacing boiler.

I was listening live to the PM and to be fair she was very clear that she was talking about typical usage. Don’t know why the press are incapable of reporting it accurately.

PilesofLogs it does feel like a deliberate plan to confuse. Probably the papers shareholders have shares in fossil fuels.

@Littlemisspawpatrol it basically means that the government will pay energy suppliers the difference between the current expected price cap (so c52p per unit for elec, and 15p for gas) and the new ‘guaranteed price’ (c34p for elec and 10p for gas - will confirm later).

Energy suppliers hedge to the price cap, so if wholesale prices were to move to, say 70p per unit, the suppliers will be covered by the hedges in place, rather than the government topping it up.

So to sunmarise, the government will fund the difference between the announced price cap, and the new price (and not the wholesale price, and the new price). HTH.

Yes same here! It would make so much more sense given that half the population still don't understand what the word cap means to say

"Prices have been capped to x pence per unit for elec.and x pence per unit for gas (give or take minor regional variation) which for the average family using 12000kwh per year works out as an energy bill of £2500"

I think that the cap should be expressed in a clearer way - eg.capping standing charge at x and unit charges as you- as it is easier to compare then.

Once more for those incapable of reading whole threads.
35p (ish ) per kwh for electric
10p for Gas.

Are they allowed to bump up the standing charges massively but keep to the cap for the prices per kw? Or does the cap include the standing charge?

Cap includes the standing charge too.

Still no help for rural areas on heating oil, I hope they look at that soon.

This is absolutely ridiculous - they need to explain what they mean and be clear.

Saying an average household is 2.4 is utterly meaningless when it comes to energy usage. Is that 2.4 in a flat, 2 bed house, mansion? Is that 2.4 with a person who needs medical equipment in 24/7.

People clearly don't understand this price cap and average, you've only got to look on here to see people feeling relieved because their DDs aren't going up by very much .

This is a good time to get people to look at their statements and look at what they are actually using!

No doubt that Moneysaving Expert will currently be working on a 'should I keep my fix or swap to the new rate' calculator.

I think for us, we're probably best staying on our fix, because it's about 15% above the current price cap, so will be a little cheaper than the new rate, but at least we won't get so much of a shock when the fix ends early next year.

However, some people who've signed up in the last 2/3 months are probably paying well above the new prices, but should be able to swap to their current supplier's standard rate without penalty, so will see an immediate saving.

About half of all houses will pay MORE than £2500.

People need to wrap their heads around that gem rather than budgeting for only £2500.

BTW the wholesale gas price is now dropping, which is a positive at least.

It's in the pipeline (no pun intended) apparently, according to the 'quick thoughts from Martin Lewis' note posted by @ickky upthread.

I've just immediately dropped back to the variable rate instead of the fix I took 2 weeks ago

Well if we are classed as average users, when our fix ends in October 2023, our monthly DD is still going to go up by around £100 a month. We currently pay around £100 for both electric and gas as we fixed in October last year before the prices went crazy.

So whilst we are lucky we aren't impacted at the moment, we are still going to be expected to find another £100 a month when our fix ends which isn't really doable for us!

I'm really hopeful they do something. 96p a litre for me so nearly a £1K to fill up the tank.

Well I’m glad I didn’t switch to one of the extortionate direct debit offers I got a few weeks ago!

@loudbatperson thank you 😊

Thank you that's really helpful.

Isn't this cap for 2 years?

Is the variable still due to go up in October?

No mention of heating oil?

People will be able to switch with no exit fee to this new 'subsidised' tariff