THE Energy Price Guarantee has undergone a change from the new Chancellor – so what does it mean?
As part of a mega mini-Budget u-turn announced by Jeremy Hunt, the guarantee will be cut short.
The government originally set out measure to help households and business deal with soaring energy bills.
The price freeze on bills will cap energy prices at £2,500, but it was formerly set out to last for two years, saving households approximately £1,000.
But now the help will end in April, meaning it will only run for six months.
After that, support households will get will be targeted – which could mean millions face soaring energy bills once the guarantee is up.
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The energy price guarantee was rolled out from October 1. It applies to customers on standard variable tariffs.
It sees the Government limit the price suppliers can charge customers for units of gas, and replaced the price cap set by regulator Ofgem.
But Mr Hunt said the help would only be in place for six months instead of two years.
It means we don't know what will happen when the energy price guarantee will end in just a matter of months time.
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It is also not known which households will get the targeted support after this point, and whether bills will still be fixed for eligible households at £2,500.
Mr Hunt said that a Treasury-led review on how energy bills will be supported after April will be launched.
He said help after this point would be targeted to those most affected by big price rises, and will incentivise energy efficiency.
National Energy Action chief executive Adam Scorer said that the move has "created huge uncertainty" for households.
He said: "Everyone knows why decisions have been made at breakneck speed, but there are questions that need to be answered, and answered quickly.
"Households on the lowest incomes are already rationing their energy usage to dangerous levels. £2,500 is beyond their means.
"Many vulnerable people were holding on by their fingertips. Government has to be very, very careful it doesn't prise them away.”
Read more about what the change means here.
What is the energy price cap?
The energy price cap sets a limit on the unit price and standing charge that companies can bill their customers.
The cap is based on wholesale prices over a six month period.
It was set to soar to £3,549 on average per year from October 1.
But the energy price guarantee will replace this – and bills will be frozen at £2,500 for the typical household.
It only means firms will be limited on what they charge customers. You pay for how much energy you use, so your bill could be higher than £2,500 a year.
The price cap affects roughly 22million people on default or standard tariffs offered by the country's energy providers, according to Ofgem estimations.
An increasing number of energy users are on the price cap as there are limited fixed deals left out there on the market.
The price cap was originally set up in January 2019 by Ofgem, in a bid to limit how much providers can charge on default energy bills to spare Brits from being unfairly charged.
It has soared to eye-watering heights this year due to the energy crisis.
What help is already available?
Over six million people with disabilities are now receiving £150 to help with the rising cost of living.
From October 1, all UK households are set to receive the £400 energy bills rebate.
The payment will be made up of six discounts between October and March next year.
Households will receive a £66 energy bill discount between this month and November and a discount worth £67 in December, January, February and March.
We've listed how the leading energy suppliers plan to pay households the discount and are waiting on others to respond.
The way you'll be paid will depend on how you pay for your energy.
If you're on a credit meter the discount will come off your bills, but if you're on a prepayment meter you'll get a voucher.
Check with your supplier to confirm how you'll receive the cash.
In November, a £300 one-off "Pensioner Cost of Living Payment" will be paid out to eight million households.
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It will be given to those who already get the winter fuel payment – which is worth between £100 and £300 for those over state pension age.
Payments for the £150 Warm Home Discount scheme will likely begin from December.
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