The news is in. The new Prime Minister, Liz Truss, has outlined her Energy Price Guarantee, but what does it mean for you? How is it going to impact your finances and help you pay for energy this winter and beyond? Let’s dive in.
The Key Points
The Energy Price Guarantee, announced today (8th September 2022) is putting a new cap on utilities. It is a plan worth £150 billion! Quite a statement for the PM to make within the first few days of her new role.
You will be well aware that last winter, the average energy bill sat at around £1277 a year. With the October 2022 price cap rise, it was due to be £3549 from next month. It was then expected to rise to over £5000 in January 2023 and £6000+ in April 2023. However, the new Prime Minister and her cabinet have set out their stall to help the British people.
A typical household annual bill will now not rise above £2500. That is still double what we paid last year. Yes, it could have been a lot worse but it could also be a lot better!
It is important to note that this is based on typical usage. If you use less, you will pay less. Use more and you’ll pay more. This Energy Price Guarantee is in place for 2 years.
There is also help for businesses, however, this is limited to six months.
No Windfall Tax
One of the major points was that there is no windfall tax to be put in place for energy companies making hugantic profits. There has been uproar about this, with the leader of the opposition Keir Starmer telling Truss that without a windfall tax it would mean “working people foot the bill for decades to come.”
I fear it will not only impact this generation, but the generations to come. We will be paying off this borrowed money for years.
Who Will Pay For It?
Remember, this is your cash at the end of the day. Truss is simply deciding how it’s used. The Government is paying for this by borrowing money. Borrowing implies that it has to be paid back. It will be. It is now national debt and Truss says the outlined plan and cost will be available later this month. Expect it to be paid back via future taxation.
Green levies will also be moved off energy bills.
How Can The Priority Services Register Give You Extra Help?
Cost of Living Payments
Many people on certain benefits have already received the first instalment of the cost of living payments.
Others are waiting for the £400 payment to hit their bank accounts. These will still go ahead this winter.
Taken A Fix?
If you switched to a fix to try and avoid as much impact as possible from the expected October price hikes, you should be able to get out of it. If it was within the last 14 days, you should be able to do this with no charge via your cooling off period. If it has been above that there could be exit penalties to pay however it’s a good idea to call the company and see what they can do.
What do you think about the Energy Price Guarantee? Let me know over on Twitter.
