With energy prices set to soar to an all-time high, the government has introduced an emergency energy guarantee to help struggling households pay their bills. Martin Lewis; host of MoneySavingExpert’s monthly live Facebook show; has issued a warning about the new measure, though – saying that there are some major pitfalls in it and you should beware.
The Truth Is Out About the New Energy Guarantee
Last week; Prime Minister Liz Truss announced that the Government would guarantee that the average household would pay no more than £2,500 in its energy bills, with the new price guarantee coming into place on 1st October.
But the money guru has warned that, while the new price guarantee applies to standard charges and unit rates, there is no guarantee on how much householders may end up paying. He warned that even if average households stop paying astronomical prices now; the households will still be paying nearly twice as much as they did this past December.
This enormous price change on October 1 has come to an end, he said. Household bills will still be just over double what they were in this past December.
So What Is Changing?
Lewis warned: “In reality, this new energy guarantee is just a price cap but for longer and by another name. Like all price caps, there is no total cap on what you can pay.”
“The £2,500 limit is only an illustration of what it would be for a typical household; the guaranteed rates and cap are actually on the standing charge and unit rates. If you use more gas and electricity, you will still pay more – there is no total cap on what you will pay.”
He went on to dispel misinformation about the new cap; which led people to believe they would pay £2,500 a year. “The consumer saving will be based on usage, but on average usage; a household will save around £1,000 a year based on the previous price cap rates for October”.
“The first thing that gets capped is the standard charge: it’s £270 a year for electricity or £100 for gas just for the facility of having it. It’s too high and I have lobbied against it. It’s going to be £127 a month from October”.
Where Can You Find Help?
Nonetheless, money saving guru reminded homeowners of the £400 Energy Bills Support Scheme; which will be paid in six monthly instalments from October. Lower users could find their bills actually end up being about 19-20 percent less.
I campaigned for there to be some kind of government action this winter, because I thought we were heading for a financial catastrophe. This system may not be targeted to help the most at the lower ends of the financial spectrum, but most people will breathe a sigh of relief anyway.
Some of the most financially insecure UK households will still receive £1,200 a year; in incremental chunks; with help paying the Council Tax or Costs of Living (depending on how much they are getting) if they’re in receipt of certain benefits.
For more information ‘click here’ to read the latest on Government Grants, helping you save money on your household bills.
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