Energy price cap freeze – everything you need to know

Brandon Lewis grilled over Truss plans for an energy price cap

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  • What does the energy price cap mean?
  • The energy price cap freeze will come as welcome news to millions of British families who are struggling to pay their energy bills which increased by 54 percent in April and are due to rise another 80 percent on October 1 – to £3,549 based on average typical use. Some of these are also business owners who are worried they may go bust after their bills have shot up by up to 600 percent. 

    New PM Liz Truss is due to make an announcement to the Commons later this morning, and reports suggest she will freeze energy bills at £2,500 a year.

    The price cap is currently £1,971, and a £400 energy bill rebate is due to be applied in instalments over the coming months – a measure announced by Rishi Sunak when he was Chancellor.

    It would mean the October price cap rise will not go ahead as planned – which will be a huge relief to millions of households and businesses struggling with the cost of living this winter.

    Ms Truss told PMQ’s yesterday: “I will make sure that in our energy plan we will help to support businesses and people with the immediate price crisis, as well as making sure there are long-term supplies available.”

    The Prime Minister continued: “I understand that people across our country are struggling with the cost of living and they are struggling with their energy bills.

    “That is why I, as Prime Minister, will take immediate action to help people with the cost of their energy bills and I will be making an announcement to this House on that tomorrow and giving people certainty to make sure that they are able to get through this winter and be able to have the energy supplies and be able to afford it.”

    If she does make an announcement that bills will be frozen at £2,500 a year until 2024, the support package will cost the British taxpayer up to £130billion.

    The new Prime Minister has previously said she is against implementing a windfall tax on the energy companies who are profiting from the current situation. So if the speculation is correct, what exactly will this mean for energy bills?

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    What does the energy price cap mean?

    The energy price cap limits the amount suppliers can charge for each unit of gas and electricity they supply, as well as the standing charge for each fuel.

    However, it doesn’t mean households won’t pay more than the cap – if they use a higher number of units than the average, their annual energy bills will be more than the cap.

    Therefore people may still want to look at whether there are ways in which they are wasting energy this winter. One way to check what’s costing you is to look at exactly how much all your electrical appliances will cost this winter.

    Meanwhile, people could pay less on their energy bills by adopting three simple tricks. One idea is to sync a smart meter with a free phone app like Hugo or Samsung SmartThings Energy.

    Another little known hack which could save Britons £40 a month on energy bills is to swap the oven for a slow cooker.

    British Gas has also shared 15 tips for saving money on energy bills. One of the most efficient ways of saving on heating bills is to turn the thermostat down one or two degrees, but bleeding the radiators can also make a difference.

    It could also be a good idea to move furniture around so that large items like the sofa aren’t obstructing radiators and not drying clothes on the radiators as it makes the boiler work harder.

    More surprisingly, defrosting the fridge and the freezer keeps everything running smoothly and costs less to run.

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