What is the energy price cap and what will happen to bills?

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Energy bills for a typical household are due to rise to £3,000 a year in April, up from £2,500.

However, Wednesday's Budget is expected to include confirmation that prices won't rise for a further three months.

What are the energy price cap and energy price guarantee?

A price cap is set every three months by Ofgem, the energy industry's regulator. It sets the maximum price suppliers can charge households per unit of energy on a standard - or default - tariff.

However, after prices soared following Russia's invasion of Ukraine, the government announced a lower energy price guarantee would temporarily replace the cap. That stands at £2,500 and is scheduled to rise to £3,000 a year for a typical household from April.

The BBC understands that government help will continue and bills will stay around their current levels for the next three months.

The energy price guarantee is scheduled to be in place until April 2024. It applies to all households in England, Scotland and Wales, with "the same level of support" in Northern Ireland.

Do I live in a typical household?

The calculations for a typical household is based on a direct debit customer using 12,000 kWh (kilowatt hours) of gas and 2,900 kWh of electricity a year.

A kilowatt hour is a unit of energy used to calculate your bill.

However, most households aren't typical.

Bills are based on how much energy you actually use, which depends on the number of people, the type of property and its energy efficiency.

What extra support will be available?

From April, some groups across the UK will receive extra help:

  • £900 to households on means-tested benefits - paid in three instalments in spring, autumn and spring 2024
  • £300 for pensioner households
  • £150 to people on certain disability benefits

When will energy prices come down?

In recent months global energy prices have been falling, and experts predict cheaper prices for households later this year.

Analysts at Cornwall Insight think the energy price cap will fall to £2,153 in July, and remain close to that level for the rest of the year.

That would make the government's energy price guarantee redundant by July.

Cornwall Insight says households could once again be able to shop around for the best deal.

What is being done to reduce bills?

A scheme running between November and March rewards households and businesses using less peak-time electricity.

Customers need a smart meter to sign up for the trial, which will run on 12 "test days".

People who don't use use high-energy appliances such as washing machines during a set hour of each test day will get up to £3 per kilowatt hour off their bill.

What help are businesses getting?

  • businesses get a discount based on a "government supported price" of 21.1p per kWh for electricity and 7.5p per KWh for gas
  • organisations on fixed price contracts are eligible if their deal started after 1 April 2022
  • those on variable tariffs receive an automatic discount for each unit of energy used
  • the savings began to appear in November's bills (backdated to October) and are automatic

The scheme applies to all non-domestic energy customers in England, Scotland and Wales, with a parallel scheme in Northern Ireland.

Unlike domestic customers, businesses were only promised help for six months until March 2023.

Support for firms after this will be much less generous.

Heavy energy-using sectors, like glass, ceramics and steelmakers, will get a larger discount than others.

Image source, Getty Images

What help have people already had?

Most households have been getting a one-off £400 discount on their fuel bills between October 2022 and March 2023, although there are no signs of that support being repeated.

Those in Northern Ireland are receiving a single payment of £600, more than in the rest of the UK, because of the widespread use of heating oil.

Eight million low-income households who get certain benefits or tax credits have received £650 in two payments.

Pensioner households got £300 and some disabled people were paid £150.

This help was being partly funded by a temporary windfall tax on oil and gas companies.

Vulnerable families can also claim help through the Household Support Fund, and the Warm Home Discount scheme.

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