What Liz Truss' Energy Price Announcement Means For You

The new prime minister has set the price cap at £2,500, saving the average household around £1,000 a year until 2024.
Millions of people were facing a financial crisis over the soaring cost of gas.
Millions of people were facing a financial crisis over the soaring cost of gas.
Owen Humphreys via PA Wire/PA Images

Liz Truss has today announced her multi-billion pound plan to help households and businesses cope with soaring energy bills.

Under her plan, charges will be capped at £2,500, saving the typical home around £1,000 a year until October, 2024.

The announcement comes just two days after she took over from Boris Johnson as prime minister.

HuffPost UK explains what is being announced and what it means.

So what has been announced?

From October 1, a new Energy Price Guarantee is being introduced which will mean the typical UK household will pay no more than £2,500 a year on their bills for the next two years.

This supersedes the £3,549 price cap announced by Ofgem last month, which left people facing an 80 per cent increase in their bills from October.

As a result of the soaring wholesale price of gas, experts had also predicted that the cap would rise to more than £5,500 from January, and even higher next spring.

According to the government, the Energy Price Guarantee will mean the typical household will save an average of £1,000 a year for the next two years.

It comes in addition to the £400 energy bills discount announced by Rishi Sunak - the man Truss beat to become PM.

Green levies, which cost households around £150 a year, will also be removed from energy bills under the new scheme.

What does it mean for me?

The amount you save will depend on the type of house you live in.

For example, someone living in a detached house, whose bill was expected to be around £4,700 from October, will now pay £3,300 - saving £1,400.

A family living in a mid-terraced house faced their bills rising to £3,300 a year. That will now be £2,350, a saving of £950 a year.

Bungalow dwellers were looking at a new annual bill of £3,500, but that will now fall by £1,050 to £2,450.

And someone in a flat, who had been looking at a £2,450 bill, will now pay £1,750 - saving £700.

Overall, however, the typical household will save £1,000.

What about businesses?

Thousands of companies across the country - which did not benefit from the energy price cap - faced going to the wall without government intervention.

Under the new scheme, non-domestic energy users like businesses, charities and schools, will be able to claim the same level of support as householders for the next six months.

After the initial six-month period ends, the government says it will provide “ongoing focused support for vulnerable industries”.

How is it being paid for?

Government borrowing, and lots of it.

After rejecting Labour’s call for a new windfall tax on energy firms’ bumper profits, Truss has left herself with no option other than to heap tens of billions of pounds more onto the national debt.

Officials say they are unable to put a value on how much it will cost, but the government is unlikely to get much change out of £150 billion.

Is that it?

No. As well as helping households and businesses, Truss said the government wants to improve the UK’s energy security so the country is less reliant on importing gas from abroad.

To that end, the moratorium on fracking is being lifted, enabling developers to seek planning permission where there is local support for it to take place.

The Government also wants more oil and gas to be extracted from the North Sea, with more than 100 new licences expected to be awarded to drilling companies.

Ministers also want to accelerate the transition from reliance on fossil fuels to cleaner energy sources like nuclear, wind and solar.

What are Labour saying?

Keir Starmer said he welcomed the new price freeze - which Labour had called for - but that it was unfair that future generations should be forced to pay for the extra debt.

Instead, the opposition leader said a new windfall tax should be imposed on energy firms, who are forecast to enjoy profits of £170 billion as a result of the rise in global gas prices.

Starmer said: “Every pound the Prime Minister’s government refuses to raise in windfall tax, and she’s leaving billions on the table, is an extra pound of borrowing. That’s the straightforward, simple argument. Loading the burden of the cost-of-living crisis onto working people who will have to pay back for years to come.”


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