Ofgem’s energy price cap increases from midnight tonight, meaning 90% of UK households using normal amounts of electricity can be charged up to £1,971 a year instead of £1,277
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Energy bills for millions of homes across the UK are soaring from midnight tonight due to an increase in the price cap by regulator Ofgem.
The price cap change means most UK households will be charged more on their energy bills from April 1st.
The average home on a standard tariff is paying 54% more for energy this year, while the UK is already in the middle of one Cost of Living Crisis .
Prepay customers will be hit the hardest, with an increase of £708 from £1,309 to £2,017.
The move will affect about 22 million households – about 90% of all households in the country.
If you’re worried about your energy bill, we’ll explain what you need to know about the energy price cap and who is affected.
What is the current energy price cap?
At the moment the price cap for normal use is £1,277 per year, but as of tonight it will rise to £1,971.
How does the energy price cap work?
Despite what the name might suggest, the price cap isn’t a cap on how much you pay for energy – but in practice, it works a bit like that.
It’s actually a limit on the rates a provider can charge for each unit of gas and electricity you use.
It is reviewed twice a year, in April and October.
Launched in 2019, it is based on a number of factors including wholesale electricity costs over the past six months.
How does the energy price cap affect me?
Households affected by the price cap are people who have energy contracts with variable rates rather than fixed rates.
In short, from midnight on these deals homes can be billed up to £1,971 per year for average energy consumption.
That will apply until October, when energy regulator Ofgem reviews the cap. It can decide to raise it, lower it, or leave it the same.
A year ago most Britons had fixed price energy deals because they were almost always the cheapest.
Energy companies competed to lower prices and attract new customers, which worked to the consumers’ advantage.
Before the bills started to mount last September, most people only had variable rate contracts because their fixed rate contract had expired and they hadn’t gotten a new one.
But then energy costs started to rise.
Fixed-rate plans became so expensive that most households switched to variable-rate plans instead — about 91% of us.
In a situation no one foresaw, the price cap became a lifesaver for households as it limited how much they could be billed per year.
What energy billing aid is there?
Chancellor Rishi Sunak is giving households a £150 tax refund to ease the burden.
This will be available from October for houses in council tax brackets A through D – about 80% of properties.
He also unveiled one £200 energy bill “subsidy” energy suppliers will spend, but will have to be repaid in the future through higher energy bills.
In his mini-budget, the Chancellor also announced last week that he would increase it Budget Support Fund some sort of hardship fund, from £500m to £1bn.
Britons struggling with the cost of living can apply through their local government website.
You can use this tool to find your municipality’s website.
Retiree households have until midnight tonight to claim up to a £300 off their energy bills Fuel payment in winter to plan.
This benefit offers between £100 and £300 to help Brits pay their heating bills during the coldest months of the year.
Payments are supposed to be automatic between November and December, but if you think you’re eligible, you can also make a claim for the money.
Send a meter reading to your energy company
You can also pay less for energy by submitting a meter reading to your energy company today.
Experts, including MoneySavingExpert’s Martin Lewis, have explained that when you take a meter reading on March 31, you can tell your utility exactly how much gas and electricity you used before the price cap was raised.
This means that any energy consumed by March 31st will be charged at a lower rate, rather than the higher rate applying at midnight on March 31st.
https://www.mirror.co.uk/money/what-energy-price-cap-rise-26600808 What is the energy price cap, when will it increase and how will it affect my bills?