New energy price cap guarantee

The new price guarantee starts 1 October, and for someone on typical use will be £2,500 a year and it will last for two years.

The current price cap is £1,971 a year at typical use, and was due to rise to £3,549 a year (and likely £5,400 a year in January). It was £1,277 a year last winter.

This will be a cap on standing charges and unit rates, so use less, you pay less, use more, pay more (I'll publish the rates when I have them). There is no total cap on what you pay, the typical rate is just a figure for illustration.

The new lower price cap includes getting rid of the green levies.

The £400 payment to all homes (paid as £66 a month over winter) will continue.

That will take the average payment to £2,100 a year.

To estimate what you'll pay, over a year, multiply current costs by 6.5% (each £100 becomes £106.50). This includes the £400 discount (but not other payments).

For those with lower than typical bills, the % increase will be lower, for higher users higher (as the £400 payment is flat regardless of use, so has a bigger proportionate reduction on lower usage).

The £650 payments to those on many benefits will continue (half's already been paid).

As will the £150 to those with disabilities and £300 to pensioners.

There's no announcement on whether these payments will be in place next winter.

VAT is not being reduced in this announcement, but there is a chance (50-50 I'd say) that may happen in the Chancellor's fiscal statement next week

For those on LPG and heating oil, we believe there will be discretionary payments to help them too (awaiting details).

For those in park homes and who pay landlords directly, I'm told they should benefit from the new business help (awaiting details).

Since the announcement the discount that is being applied to the price-capped tariffs is likely to be applied to all tariffs, including fixes (the new 'price guarantee' will effectively work as a per pound discount off the unit rates of the pre-planned 1 October price cap rate). If this is correct, many fixes that currently look costlier than the price guarantee will end up cheaper.

The energy price guarantee limits the amount households can be charged per unit of gas or electricity. So your exact bill will continue to depend on how much energy you use. You do not need to apply, and there's no need to contact your energy supplier. For households in England, Scotland and Wales who pay for their energy through monthly, quarterly or other regular bills, the guarantee will be applied when your bill is calculated.