What the Energy Price Guarantee Actually Means for You

Liz Truss has announced an Energy Price Guarantee, also known as a price freeze, to come into effect on 1 October. But what does that mean?

What is the Energy Price Guarantee?

It is a guarantee that energy suppliers will not charge their customers more than a set price per unit (or kilowatt-hour / kWh) of energy used. The guarantee will last for 2 years and will be in place from 1 October 2022 to 30 September 2024.

An October 2022 energy price rise will still happen, but after that, there will be no further price increases before 30 September 2024.

Will my bills be limited to £2,500?

In short, no. It does not guarantee a maximum charge of £2,500 per household per year. Some people might pay less than £2,500 per year on their home energy bills, some people will pay more. This is because it is a not a cap on your bill, but on the cost per unit of energy you use. So, the more energy you use, the more you pay.

It is also not a replacement of the planned October energy price increase, which will still go ahead. This Energy Price Guarantee will happen at the same time as the price increase, and it should lessen the harsh impact of rising energy costs, particularly those we were due to face in January 2023.

What does it mean for me?

The price an energy supplier can charge for the energy it supplies will not change between 1 October 2022 and 30 September 2024.

Energy is measured in kilowatt-hours (kWh). The guaranteed maximum prices per kWh from 1 October 2022 are[ii]:

*If you are already tied into a fixed tariff, which is:

higher than 34p per kWh for electricity, your supplier will reduce the tariff by 17p per kWh
higher than 10.3p per kWh for gas, your supplier will reduce the tariff by 4.2p per kWh
Standing charges from 1st October 2022 will remain at the planned increase to 46p per day for electricity and 28p per day for gas.

Do I need to do anything?

Energy customers do not need to do anything – any changes will be set automatically by suppliers.

If you are off grid, for example living in a park home or part of a heat network, this scheme guarantees you access to a discretionary fund. We await details (12th September 2022).

Suppliers have been given a pause on a levy they usually pay UK Government (Climate Change Levy rates – GOV.UK (www.gov.uk)) and all UK energy suppliers will be subsidised by UK Government for extra costs they incur from the energy price guarantee.

Where do I find out how it affects me?

Look at your latest energy bills to check the kWh rate and standing charge rate that you are due to pay from 1 October 2022. If the rates you have been quoted are higher than the rates listed in the above table, the energy price guarantee will reduce the amount you are due to pay per kWh.

You can contact your energy supplier if you need to.

Care & Repair has dedicated Home Energy Officers who can help you understand your bills and help you keep your home warm. Either contact your local Care & Repair Agency, or contact Jo Harry: Jo.harry@careandrepair.org.uk or by phone: 07375 205005

Estimates of annual bills by property types

The £2,500 bill per year sum is an overall average across the whole of the country. UK Government has provided a further, estimated breakdown using information of average household energy use in 2019 to put this guide together. Under the Government Energy Price Guarantee, average annual bills are likely to be:

Average of all dwellings: £2,500

Average of all houses: £2,650

Average of all flats: £1,750

Detached house: £3,300

Semi Detached: £2,650

End Terraced: £2,450

Mid Terraced: £2,350

Bungalow: £2,450

Converted flat: £1,950

Purpose built flat: £1,750

Where can I find help if I am worried about my winter energy bills?
Make sure that you receive the cost-of-living financial support payments you are entitled to, using our guide to cost-of-living financial support.
Contact our 70+ Cymru service or Jo Harry, 70+ Cymru Manager Jo.harry@careandrepair.org.uk 07375 205005 who can connect you with your local Home Energy Officer. You can also:
Contact your energy supplier. If you are not sure who it is, you can check here: Finding your energy supplier or network operator | Ofgem
Money and Pensions Service: What to do about rising energy bills | MoneyHelper
Check if you can save on your water bills: Support with bills | Dŵr Cymru Welsh Water (dwrcymru.com)
If you have debt worries, find a local debt adviser: Use our debt advice locator | MoneyHelper
NEST energy debt factsheet with information on suppliers’ help for customers experiencing hardship: support-for-those-in-energy-de-5ac614799537c.pdf (gov.wales)
Visit your local Citizens Advice Bureau: Search for your local Citizens Advice – Citizens Advice
Get Citizens Advice online: Your energy supply – Citizens Advice

[i] Energy bills support factsheet: 8 September 2022 – GOV.UK (www.gov.uk)

[ii] Energy bills support factsheet: 8 September 2022 – GOV.UK (www.gov.uk)