What does the new energy plan mean for you?
This week we have not only seen a new King but also Elizabeth Truss now taking office as our new Prime Minister. And first on her agenda is the current energy crisis the UK is facing. Her new plan the ‘Energy Price Guarantee’ was unveiled on Thursday. It states that price rises will be limited for 24 million households in England, Wales, and Scotland on variable domestic energy tariffs. They would normally have their bills governed by regulator Ofgem’s price cap – but the government’s new two-year plan supersedes those arrangements.
What does this mean?
It means the average unit price for dual fuel customers paying by direct debit will be limited to 34p per kilowatt hour (kWh) for electricity and 10.3p per kWh for gas. So, for a typical household – one that uses 12,000 kWh of gas a year, and 2,900 kWh of electricity a year – it means an annual bill will not rise above £2,500 from October. Without this intervention, that annual bill would have been £3,549 a year. However, charities say that many will still struggle because, last winter, the typical household paid £1,277 a year. The total bill will still vary depending on a household’s actual gas and electricity use, and their method of payment.
How much will this cost the economy?
UK taxpayers will be on the hook for as much as £200 billion over the next 18 months to cover the cost of Prime Minister Liz Truss’s plans to contain energy prices. Reports suggest the package could exceed the cost of the furlough scheme at over £100bn. There’s broad consensus about the need for a big policy. The question is – who’s going to pay for it?
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