Prime Minister Liz Truss has stated that energy expenses for a typical home will be restricted at £2,500 per year beginning October 1, 2022, for the following two winters. A £400 energy rebate will also be given as anticipated beginning in October. Martin Lewis, the founder of MoneySavingExpert.com, has compiled a list.
Watch Martin Lewis' first round-up and read his 15 must-knows.
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"On the heels of a prior briefing and the announcement in Parliament, here is my very rapidly hammered out explanation of the new energy price freeze," Martin Lewis, creator of MoneySavingExpert.com, stated.
The new price guarantee goes into effect on October 1 and will cost £2,500 per year for someone with ordinary use for two years.
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The current annual price ceiling is £1,971 at normal use, and it was set to climb to £3,549 (and possibly £5,400 in January). Last winter, it was £1,277 per year.
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This will be a cap on standing charges and unit rates, so if you use less, you pay less; if you use more, you pay more (I'll post the prices once they're available). There is no overall cap on what you can pay; the normal rate is merely an example.
The new lower price ceiling includes the elimination of green charges.
The £400 payment to all houses (paid as £66 each month during the winter) will be maintained.
This brings the average annual payout to £2,100.
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To calculate your annual costs, multiply current costs by 6.5% (per £100 becomes £106.50). This includes the £400 savings (but not other payments).
The percentage rise will be smaller for people with lower-than-average bills, and higher for those with higher bills (since the £400 payment is flat regardless of consumption, thus has a larger proportional decrease on lower usage).
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The £650 payments to persons on various benefits will continue (the first half has already been made).
As will the £150 for disabled people and the £300 for pensioners.
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There has been no word on whether these payments would continue to be made next winter; nevertheless, I believe the political reality is that comparable payments will be made next year, at least for benefit claimants.
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VAT will not be decreased as part of this announcement, but there is a probability (50-50) that it will be included in the Chancellor's budget statement next week.
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Those using LPG and heating oil, I'm informed, will also receive discretionary payments (awaiting details).
Those who live in park homes and pay their landlords directly could profit from the new business assistance, according to my sources (awaiting details).
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Since the announcement, I've heard that the reduction being applied to the price-capped tariffs would most likely be extended to all tariffs, including repairs (the new 'price guarantee' will essentially act as a per pound discount off the unit rates of the previously anticipated 1 October price cap rate). If this is right, many solutions that appear to be more expensive than the price guarantee will wind up being less expensive. Earlier, the information I was informed by the Government was that "everyone can get out of a fixed tariff without departure penalty". This may have altered, leaving it up to businesses. I'll confirm when I know, but don't act on anything until its set in stone.
"I'm being informed there will be legislation, so same will apply in Northern Ireland.
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"However, it's crucial to highlight that on the energy price guarantee, the fine print of the policy (e.g, unit rates), specific regulations on fixes, LPG, Northern Ireland etc is still being determined. So be cautious about making judgements based on it just yet. I'll update our information as soon as we have it."
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More information on the energy price guarantee
Following Martin's first overview, here's some further information on the energy price guarantee and other stated initiatives.
The energy price guarantee caps the amount of money that families can be paid per unit of gas or electricity.
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As a result, your precise cost will continue to be determined by how much energy you consume. You do not need to apply, nor do you need to contact your energy provider. The guarantee will be applied when your bill is computed for families in England, Scotland, and Wales who pay for their energy through monthly, quarterly, or other regular bills. The following are the typical unit rates for dual-fuel clients who pay via direct debit:
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Unit price of electricity: 34.00p per kWh,
The daily fee is 46.36p.
- Gas Unit Price: 10.30p/kWh,
The daily price is 28.49p.
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However, unit costs vary depending on where you reside, so for more information, read our Regional direct debit rates and charges round-up.
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We'll also update this report once we know how much we'll have to pay under the price cap. The calculator has been updated to reflect the new rates.
A discretionary grant will also be available to people living off-grid, including those in park homes and on heat networks. We've requested further information about this.
A new plan for enterprises and other non-residential energy consumers will provide comparable assistance for six months. Following this initial six-month plan, the government will continue to help "weak" industries. A review will be conducted in three months to determine where this should be focused, however more specifics have yet to be verified.
Northern Ireland will get the same degree of consumer and corporate assistance. However, no specifics on how this would function have been verified.
