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Liz Truss set out plans to tackle soaring energy bills for households and businesses on Thursday.
The new prime minister announced that bills will be capped at £2,500 to help ease the burden on families. Still a high figure but down on the Ofgem cap that would have seen bills rise 80% to £3,549 on October 1.
What does this mean for your energy bills this autumn and winter?
How much will I now pay for my gas and electricity?
Under Ms Truss’s new ‘energy price guarantee’ a typical household will pay no more than £2,500 a year on their energy for the next two years from October 1. The plan will limit the price suppliers can charge customers for the energy they use and effectively freeze households’ bills, overriding Ofgem’s existing energy price cap that was due to come into force at the beginning of next month. The prime minister also announced the removal of the green levy, which will knock a further £150 off household bills. The government said the package will save the average household about £1,000 based on current energy prices.
With the £400 discount on bills that many are set to receive this winter, the average household bill will be £2,100. It’s important to note, the price is not a cap on the total you pay – this figure is just an illustration – if you use more energy, you’ll pay more.
Will I still get the promised discount on my energy bills and cost of living support?
Yes.
All this will come on top of the already announced £400 energy bill discount (paid at £66 a month over winter) most people will receive in October. This will take the average payment to £2,100 a year. All other cost of living support packages set out under Ms Truss’s predecessor, Boris Johnson, will remain, including the £650 payments promised to more than a million low income households or people in receipt of universal credit (half of which has already gone into people’s bank accounts), the £150 promised to people with disabilities and the £300 payable to pensioners.
How long will it last?
The guarantee will be in place for two years from October 1.
What about those not on the main grid? Those living off main gas or electricity will receive support through a fund. No further details were given. The government will set up a fund for those using heating oil, living in park homes or those on heat networks so that all UK consumers can benefit from “equivalent support”, Ms Truss said Who will fund it?
The package of measures will be initially funded by the government, although there are plans in place to reduce the burden of the cost, including an ‘energy markets financing scheme’, details of which will be published at the end of October.
Former vaccine roll out chief, Madelaine McTernan, will head up a new energy supply taskforce who will lead negotiations with domestic and international suppliers, as well as renewable producers, to reduce the price they charge for energy.
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What about businesses?
Many businesses at the heart of communities are also at risk as many face sky-high bills this autumn. The energy cap does not apply to businesses, many of which are facing sky-high energy bills from October, putting unprecedented strain on the retailers and the very real prospect of wiping out thousands of jobs and livelihoods. Ms Truss announced a a six-month scheme will offer equivalent support for businesses and other non-domestic users such as schools and hospitals. After that there will be ongoing support for the most vulnerable industries, with a review in three months’ time to decide where the help should be targeted.
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