Energy Price Guarantee: How will the bill freeze announced by Liz Truss affect you | Business newsletter

An unprecedented intervention in energy markets would protect households, businesses and public sector organizations from the worst of soaring wholesale gas prices.

Truss Government”energy price guarantee“aims to keep the pain of bills facing the public at less than half what is anticipated for the coming winter, with companies also getting help to protect the economy – but Not for long.

Public sector organizations such as schools are also included.

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While this plan spares us all the anticipated payouts for immediate bills, there will eventually be a price to pay as the taxpayer who was initially placed on the hook for assistance could exceed oversized the COVID-era bailout.

Here, Sky News explains how you’ll be helped in the coming months.

Family

Last month it was announced that the energy price cap would rise to an annual average of £3,549 in October from £1,971 currently.

That won’t happen now.

Ms Truss said the cap would be replaced by a new price guarantee – an amount that would not exceed £2,500 from October for two years.

Helping bring that figure back to the current cap is a previously announced £400 discount per household and the temporary removal of green fees, worth £150 a year, from bills .

The energy price guarantee covers the majority of households – some 24 million people pay their electricity and gas bills by direct debit.

This notice doesn’t mean you won’t pay extra for your gas and electricity. It’s an average total based on unit price, so the more you use it, the more you’ll pay.

What the Treasury is doing is effectively covering the difference between the (spiky) wholesale prices that will exceed the ‘guaranteed’ level of the household bill of £2,500.

I am not currently price capped. Will I benefit?

A small fraction of households are using time-limited fixed-price deals.

There are 4.5 million on prepaid meters currently paying about 5% more than those under the price cap.

It is understood that the same comparable discount will be applied to all applicable variable tariffs in the domestic market but the government is seeking answers to clarify which will be. What does that mean for fixed-rate customers?

When things settle down, some may have to pay a penalty to get out of their trade, assuming it’s financially beneficial to do so.

Ms Truss’ statement in the Commons revealed that people who do not directly pay for their energy, such as those living in park houses, will be helped through a fund.

The prime minister said heating oil assets would also benefit from the new fund. Details are promised next week at the latest.

Enterprises

Companies have no shield from rising energy prices unless they have or have a fixed agreement.

This charge has resulted in a typical five-fold increase in energy costs – which is worse for energy-intensive companies.

Some of those additional costs contribute significantly to inflation as they are passed through the supply chain to consumers in the goods and services we use. Think food, attractions, and transportation.

What the government said on Thursday is that business will benefit with six months of energy support, in line with the level of support for consumers.

A series of assessments, starting in December, will then determine which areas will need targeted aid after April.

Ms. Truss suggested that hospitality would be among the potentially eligible sectors.

Public Sector Agencies

The same help offered to businesses would apply to charities and schools.