Energy prices: What is the cap, how high will bills go and what can I do?

The increase will see their monthly payments rise to £295.75-a-month on average - an 80 per cent rise on the current cap. For large families in uninsulated, large houses it could be much higher.

The rate is set by energy regulator Ofgem.

The huge increase, with another leap predicted in January, has sparked calls for the government to step in.

What is the energy price cap?

The price cap is the maximum amount companies can charge for energy.

From October 1 it will be £3,549 for the majority of households and £3,608 for those on pre-payment meters.

Why are energy prices so high?

Energy prices rose sharply when lockdown lifted and the economy began to return to normal and demand soared. They increased because the war in Ukraine has sharply reduced supplies of Russian gas.

How is it affecting people?

Energy company E.on UK suggests 40 per cent of people will struggle to pay their bills when the new price cap kicks in on October 1.

The NHS Confederation said many people will have to choose between skipping meals or heating their homes.

Sheffield City Council is considering ‘warm banks’ - opening heated community buildings for people to attend during the day so they don’t have to heat their own homes.

What help is available?

All UK households will receive a one-off £400 discount on fuel bills from October. Some 8 million households on benefits or tax credits will receive an additional £650.

There are further payments of £300 to pensioner households and £150 to disabled people.

Money Saving Expert Martin Lewis said the real shock is that today’s energy price cap rise was announced ‘without firm new help in place’.

Warning of a ‘catastrophe’ he wrote: “More help is desperately needed for poorest or people will die this winter due to the unaffordability of an 80 per cent energy price cap hike SO FAR.”

Fifty disability charities have called on Tory leadership rivals Liz Truss and Rishi Sunak to promise more support.

An idea for the Government to guarantee loans of £100m to energy companies to allow them to keep bills frozen at just under £2,000 while they buy the gas required for the next two years has been suggested by Scottish Power.

How are people reacting?

The looming crisis has sparked a controversial Don’t Pay UK protest movement which unfurled banners on Park Square Roundabout in Sheffield and other cities today.

They are calling on people to ‘strike’ and stop paying from October 1 until the new price cap is reversed to pre-April 2021 levels. Some 100,000 people have signed a petition.

What Can Your Provider Do If You Refuse To Pay?

Les Roberts, of SME utilities comparison firm Bionic, said: “Your energy provider does have the right to take action if you stop paying your direct debit and begin to rack up debt. They could potentially move you on to a prepayment meter, which means you would most likely be paying a higher rate. A prepayment meter requires you to pay for energy as you use it.

“However, you do have some rights as a consumer before this happens. Your supplier has to give you at least 28 days to repay your debt before they take action.”

Can Refusing To Pay Affect Me In The Future?

Not paying energy bills can have a negative impact on your credit score, which could make it harder to borrow money in the future.

Mortgage broker Adam Hosker, of Cyborg Finance, said it would be a 'wrecking ball' through their credit score and would 'trash your future when it comes to securing a mortgage or taking out other forms of credit and debt'.

Can I Switch Energy Providers If I’m In Debt?

If you have been in debt with your current provider for more than 28 days your switch might be blocked. But your supplier can’t stop you from switching if it’s their fault you’re in debt.

If you have a prepayment meter, you can switch if you’re in debt, so long as the amount you owe is £500 or less per fuel. In this instance, the supplier you switch to will take on the debt and you will repay them instead.

Can Your Energy Provider Cut You Off If You Refuse To Pay?

If you can’t agree a repayment plan with your supplier and refuse to have a prepayment meter installed, then your supplier can begin steps to disconnect your supply.

Les Robert of Bionic said: "Ofgem has stated that suppliers should do everything in their power to avoid disconnecting your supply especially if you are ill or disabled and they are not allowed to disconnect the supply of a person who is above the state pension age or lives alone between the colder months of October to April.”

Am I Paying Too Much?

Ofgem has ordered a review as the watchdog found 7m households currently on a Standard Variable Tariff experienced a bill increase of over 60 per cent between February and April this year.

The regulator found that the firms Ecotricity, Good Energy, Green Energy UK, TruEnergy and Utilita Energy were potentially calculating bills inconsistently.

If your supplier is one of these companies you should contact them about a possible rebate. Remember the best action to take is to compare different suppliers for the best deal using a comparison service.

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