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Liz Truss' plan to limit energy bills

According to predictions from the End Fuel Poverty Coalition, over 12 million households (42%) across the UK will face fuel poverty this winter.

To face this, Prime Minister Liz Truss announced a plan to limit energy bills.

Read on below to find out which emergency measures the government will be taking regarding the increase in gas and electricity rates.

 

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Government announces the replacement of the price cap with a new Energy Price Guarantee

Last week, the government has announced the replacement of the price cap with a new Energy Price Guarantee to support households with their energy bills.

According to the government, the Energy Price Guarantee will make sure that from 1 October and for the next 2 years, a typical household in the UK will pay an average of £2,500 a year on their energy bills, which will allow a saving at least £1,000 a year, based on current prices from October. At the same time, energy suppliers will be reimbursed for this cost. This also considers temporarily suspending green levies, worth around £150. 

Be aware that these measures are aside from the Energy Bills Support Scheme, which will offer a £400 discount for energy bills for all households in the UK.

The new Cost of Living Support package will also continue to offer at least £1,200 to 8 million of the most unprotected households in the UK throughout the year.

 

 

How is the new Energy Price Guarantee applied to my energy bills?

The Energy Price Guarantee will be automatically applied to whoever lives in England, Wales, and Scotland. When it comes to consumers in Northern Ireland, the government is working with the Northern Ireland Authority for Utility Regulation (NIAUR) and with NI energy suppliers to guarantee that the same level of aid is received by individual clients and businesses in this country.

As the Energy Price Guarantee limits the amount you can be charged per unit of electricity or gas, your exact bill amount will be influenced by how much energy you consume.

 


How much you will save based on your type of home

As specified by the government, here is an example of how much you will save on average, based on your type of home: 

Property type Under October price cap Under government Energy Price Guarantee Difference
All dwellings £3,550 £2,500 £1,050
Houses £3,800 £2,650 £1,150
Detached £4,700 £3,300 £1,400
Semi Detached £3,800 £2,650 £1,150
End Terraced £3,500 £2,450 £1,050
Mid Terraced £3,300 £2,350 £950
Bungalow £3,500 £2,450 £1,050
Flats £2,450 £1,750 £700
Converted flat £2,750 £1,950 £800
Purpose built flat £2,400 £1,750 £650

 

Aid for non-domestic properties

As for the non-domestic energy users, like businesses, they can make the most of a new 6-month scheme that the government is creating to help them pay for energy bills this winter, in case they aren't on fixed-price energy deals.

Later, there will be a review to examine where this aid should be targeted, to make sure that users who need it the most get the proper aid they need.

 

Long-term reform to solve issues in the UK’s energy sector

While it's essential to address the energy problems the UK currently has, - namely how to reduce energy costs for families and businesses this winter - there is a lot of work to be done to reform the long-term issues the energy sector has in the country.

With this in mind, a new Energy Supply Taskforce is negotiating with domestic and international energy suppliers - including renewable producers - to have long-term contracts that allow to bring down the prices imposed for energy.

According to this press release, the government is also trying to develop the domestic energy supply and increase UK's energy resilience, to become an energy exporter by 2040, through the following measures:

  • Launch a new oil and gas licensing round;
  • Lift the moratorium on UK shale gas production;
  • Speed up sources of energy supply from the North Sea oil and gas to clean nuclear, wind, and solar energy;
  • Target 24GW of nuclear energy by 2050;
  • Reform the structure and regulation of the energy market through recommendations from a new review of the UK energy regulation;
  • Make sure that the UK is meeting the net zero 2050 target cost-effectively.

 


 

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Published by Elisa Ribeiro Soares
Elisa Ribeiro Soares