What was the energy price guarantee and will it be replaced by the price cap?
MILLIONS of households have seen their energy bills fall after the energy price guarantee was dropped.
But what was the guarantee, and has it been replaced by the price cap? Here’s everything you need to know.
What is the energy price guarantee?
Last year, the Government stepped in to stop bills rocketing to over £4,000 under the price cap.
It introduced the energy price guarantee (EPG) to limit the average bill to £2,500 – although this was just an average figure and some households paid less or more than this.
The guarantee was rolled out from October 1 and applied to roughly 29 million households on standard variable tariffs.
It saw the Government limit the price suppliers could charge customers for units of gas and electricity.
It temporarily replaced the energy price cap, set by the regulator Ofgem, but has since been dropped, after a new price cap came into effect on July 1.
What is the energy price cap?
The price cap on energy bills was introduced in January 2019 as a way to ensure households are not ripped off by energy suppliers.
It works by setting a limit on the maximum amount suppliers can charge for each unit of gas and electricity.
Ofgem also sets a maximum daily standing charge which is what households have to pay in order to have their home connected to the National Grid.
The price cap changes every three months with the latest cap taking over from the energy price guarantee on July 1.
Analysts at Cornwall Insights are expecting bills to fall again, by around £96 over the year, when the next price cap comes into effect in October.
Gas prices started rising last summer as demand bounced as countries emerged from lockdown.
But the situation was made worse when Russia invaded Ukraine and started to restrict gas exports to Europe.
Gas prices are also decisive for electricity prices.
This is because gas is so important for the generation of electricity.
Over the last year, 42% of the UK’s electricity came from burning gas.
What are the current charges for gas and electricity?
For those who pay by direct debit, the average home is charged 8p per kWh for gas and 30p per kWh for electricity.
The average standing charge for those paying by direct debit is 29p per day for gas and 53p per day for electricity.
For those who pay through a prepayment meter, the average home is charged 7.11p per kWh for gas and 29.06p per kWh for electricity.
The average standing charge for those who pay through a prepayment meter is 37.80p per day for gas and 58.08p per day for electricity.
For those who pay on receipt of bill, the average home is charged 7.91p per kWh for gas and 31.72p per kWh for electricity.
The average standing charge for those who pay on receipt of bill is 34.34p per day for gas and 59.51p per day for electricity.
Be aware that the exact unit rates and standing charges that you pay will vary slightly based on your supplier and where you live.
To find out your specific rates check your most recent gas and electricity bill.
What help is already available?
The Government is handing out cost of living payments to millions of households in 2023 and into 2024.
They are worth £900, £300 and £150, totalling £1,350.
Depending on your circumstances, you might be entitled to all three.
The £900 payment has been split into three instalments worth £301, £300 and £299.
The first instalment has already been made to millions of people.
The second and third instalments will be made for most people this autumn and in spring 2024 respectively.
Millions of pensioners will receive the £300 cost of living payment too, while those with disabilities should be in the process of receiving a £150 payment.
Meanwhile, one London council is offering £250 free cash payments via a £1million hardship fund.
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