PRIME Minister Liz Truss has announced a price freeze to energy bills for two years, with the typical family paying £2,500 a year from October.
The new Energy Price Guarantee means households will avoid a huge jump in costs.
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The new Energy Price Guarantee sets a cap on the maximum amount energy suppliers can charge per unit of gas or electricity.
This means yearly bills for some homes will be higher or lower depending on usage.
But in all cases, households will now pay less than expected for their gas and electricity following the government’s announcement.
Without the intervention the typical duel fuel bill would have risen from £1,971 to £3,549 under Ofgem’s price cap.
Below, we explain what the changes mean for you, and how much you might expect to pay depending on the type of home you live in.
Consumer expert Martin Lewis has also explained how to calculate what your bills might be.
One thing to bear in mind is that the below prices are estimates, and the exact amount can depend on things like the energy efficiency of your home and how many rooms you have.
But they do offer you some rough guidance on what your costs might be.
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What does the new price guarantee mean for you?
The new Energy Price Guarantee means the average household will save £1,050 on their yearly energy bills, according to the government.
But not everyone will see their yearly costs stay below £2,500.
Those in detached homes’ average yearly bills will be £3,300, while semi-detached homeowners will see theirs reach £2,650.
All other types of household will see their average energy bills priced below £2,500 though, including flat and bungalow owners.
The new price guarantee comes on top of the £400 energy rebate, which will start to be applied from October.
Millions of households will be in line for additional help as well, including through the £650 cost of living payment and the £150 disability cost of living payment.
For those with businesses, the Prime Minister announced support for them for at least six months.
And millions excluded from the price cap will get support through a new fund.
This is because the energy price cap only applies to those on default tariffs.
What is the energy price cap?
The energy price cap, set by the regulator Ofgem, was introduced in January 2019.
It sets a limit on what energy suppliers can charge their customers per unit of gas or electricity.
It also sets a maximum standing charge on what you have to pay to have your home connected to the national grid.
Ofgem just recently announced a new price cap which was due to come into effect from October 1 and would have seen the average households’ yearly bills hit £3,549.
But there were calls for it to be frozen amid fears million of households could slip into fuel poverty.
What other energy bill support is there?
The Energy Price Guarantee will see households’ average yearly bills much lower than what they would have been.
But they’ll still, on average, be higher than they currently are.
If you need extra help to get through the winter, you have options.
There’s the cost of living payments, some of which have already started being issued.
Millions claiming disability benefits will see their £150 payment made from September 20.
Meanwhile, the £400 energy rebate will start being applied from October.
If you don’t know how the rebate will be issued, you can read our guide.
The second half of the £650 cost of living payment will start being made this autumn.
We revealed the full list of benefits eligible for the £650 cost of living cash.
Plus, here’s free cash you can get if you DON’T qualify for the £650 cost of living payment.
