Issues with supply and demand in the global wholesale market have led to a drastic increase in energy bills. However, on 8 September 2022, new Prime Minister Liz Truss announced a scheme that will essentially replace Ofgem’s energy price cap, which was initially due to rise on 1 October.
This scheme, known as the Energy Price Guarantee (EPG), aims to mitigate the impact of the energy cap increase by limiting the amount that households’ energy bills can increase by, but exactly what does this mean for you? Read on to find out more about the EPG and how it might affect your household.
What is the Energy Price Guarantee?
Under Ofgem’s planned 80% energy price cap increase, a typical dual-tariff household with average usage would have seen its energy bill rise to approximately £3,550 a year. With the EPG in place, the average household’s annual energy bill will instead be held at £2,500, with the government topping up the energy supplier’s loss of income from the customer.
Put simply, this means that instead of rising by 80%, your energy bill will likely increase by closer to 27%. Please note that it is highly probable your energy bill will increase in the next month or so – the real question is ‘by how much?’.
So, are energy bills capped at £2,500?
Many people have interpreted the EPG to mean that £2,500 is the maximum amount they will have to pay. However, the scheme only limits the price that energy suppliers can charge per unit of energy, meaning that your overall energy costs will still depend on your household usage. As usual, you will have to pay for what you use, so if your usage is above average, your energy bill can exceed £2,500.
It is also worth noting that standing charges will factor into your overall energy bill as well, and these are likely to increase again in October.
What does the EPG mean for you?
The EPG should ensure that your energy bill only increases by a maximum of around 27%, rather than the original figure of 80%. It is worth noting that this estimate is based on your usage staying roughly the same, or at least within the range of what can be considered ‘average’ for your household.
That being said, there is no denying that paying £2,500 a year for energy is a big change compared to October last year, when the average bill was around £1,277. As a result of this drastic price hike, it is highly likely that many households will struggle to pay their energy bills this winter, despite the government grants and schemes that have now been put in place.
What other support is available?
One of the household grants available to UK households is the Energy Bills Support Scheme, which will provide every household with £400 for their energy bills. This will be spread across 6 months, with payments of £66 a month in October and November and £67 a month from December 2022 to March 2023.
While this £400 grant will undoubtedly make a huge difference to some UK households, it will not provide enough support for countless others. If you need help reducing your energy costs, UK Energy Management (NE) Ltd can help.
We provide customers around the UK access to the funding they need to improve their home’s energy efficiency and cut their energy costs through energy-saving measures such as loft insulation, electric heating systems, smart meters, and much more. Check your eligibility for funding online now or contact us today to learn more.