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Latest Energy Bill News

This is a worrying time for millions in the UK as energy bills continue to rise. With a new Prime Minister comes new pledges however. We examined the latest energy bill news.

Latest Situation

Basically, the government has cancelled the planned 1st October 80% rise in the energy price cap. There are still rises still to come, but hopefully lower. The situation is different for us all, depending on your plan, and whether you chose a fixed or variable deal.

A typical bill will increase from £1,971/year to £2,500 on October 1 when the energy companies replace the present price ceiling with an approximately 27% higher “price guarantee rate”. This will continue for two years.

There is no maximum amount you can spend on energy. Instead, there is a daily fee and cost per energy unit cap for England, Scotland, and Wales standard tariffs. They account for about 85% of houses.

Rebates Remain

Back in May, the then-Chancellor proposed a fixed payment of £400 to offset each household’s winter energy costs. That still will take place. Add this £400 in, and the average price guarantee increase over the cap is 6.5%.

Despite the fact that everyone must pay the same £400, individuals with minimal usage may actually pay less overall than they would at the existing rate.
In reality, from October 2022 to March 2023, you will either get or have your charge lowered by £66 or £67 each month.
Despite the two-year duration of the price guarantee rate, it is unknown if the £400 payment will be made next winter.

Energy Bill News – The New Rates

Here are the average dual-fuel direct debit rates for the new energy price guarantee starting on 1 Oct, how it compares to now, and what was due to happen under the old price cap. The new rates include the announced ending of green levies on energy bills.

  • Electricity
    Unit rate: 34.0p/kWh (currently 28.3p, was due to be 51.89p)
    Standing charge: 46.4p/day (currently 45.3p, was due to be 46.4p)

  • Gas
    Unit rate: 10.3p/kWh (currently 7.4p, was due to be 14.76p)
    Standing charge: 28.5p/day (currently 27.2p, was due to be 28.5p)

Fixed Rate Deals

Technically, the October unit rates are reduced to reflect the price guarantee for ordinary tariffs. According to the government, many (but not all) fixed rates will also experience the same 4p/kWh gas and 17p/kWh electricity reductions as of October 1. That is about equivalent to a reduction of 30%.

My best guess, which is still only a guess because there is so much ambiguity, is that the reduction will only apply to fixes that will cost more than the price guarantee. Energy suppliers also inform us that, according to their interpretation of the government’s regulations so far, higher fixed prices should only decrease to the level of the new guarantee.

It appears that the vast majority of those with fixed costs will either automatically pay less than the new price guarantee or energy companies will adjust their fixed costs to match it. So effectively, the companies move such customers to a price guarantee tariff.

Energy Bill News – Additional Rebates For Some

In May, the government announced that all households would also get £400. We mention this above. But there are more rebates that companies will issue to those who need it most.

-Benefits: This year, two lump sum payments totaling £650 will be made to almost eight million homes in the UK who receive means-tested benefits. The first half has already been paid, and the second half will follow this fall (companies have not yet set a date). 

Disability: Starting on September 20, an automatic one-time payment of £150 will be sent to the approximately six million UK residents who receive various disability benefits.

Pensioners: Between 19 and 25 September 2022, every UK household with a member above the state pension age will also get an additional £300 on top of their regular winter fuel payment, which is made in November or December.

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