In her first significant act as Prime Minister, Liz Truss revealed details of what the Energy Price Guarantee means for households.
From 1st October, the typical UK household will pay an average of £2,500 for their energy bills, with this guarantee remaining in place for two years.
The guarantee is automatically applied to all households.
Compared to current energy prices, households save at least £1,000 a year.
What the Energy Price Guarantee means for households, thankfully it is in addition to the already promised £400 energy bills discount being paid to all households over the coming months.
While Northern Ireland is not subject to the same Energy Price Guarantee, it will receive the equivalent level of support.
Businesses and public sector organisations will also get equivalent support, with prices frozen over the winter for six months.
At the same time, the government is committing to dealing with the root causes of problems in the energy market, focusing on boosting the domestic energy supply.
Prime Minister Liz Truss said:
“Decades of short-term thinking on energy has failed to focus enough on securing supply – with Russia’s war in Ukraine exposing the flaws in our energy security and driving bills higher. I’m ending this once and for all.
“I’m acting immediately so people and businesses are supported over the next two years, with a new Energy Price Guarantee, and tackling the root cause of the issues by boosting domestic energy supply.
“Extraordinary challenges call for extraordinary measures, ensuring that the United Kingdom is never in this situation again.”
The six-month scheme for non-domestic energy users, including businesses and public sector organisations, gives equivalent support to that provided to consumers, offering protection from rapidly rising energy bills.
Once this six-month scheme expires, the government says it will provide ongoing, focused support for the most vulnerable industries, with those details revealed in three months.
Under the support scheme, the government will pay energy suppliers the difference between the lower price and what they would have charged if the scheme was not in place.
The government will also fund the projects previously funded by green levies, which are being temporarily removed from energy bills to help ease the cost crisis.
Taxpayers will ultimately pay back the cost of providing these guarantees. However, the details of the funding for the scheme are still to be announced, with that announcement delayed by the death of Queen Elizabeth II.
Chancellor Kwasi Kwarteng said:
“Millions of families and businesses across the country can now breathe a massive sigh of relief, safe in the knowledge that the government is standing behind them this winter and the next.
“The price of inaction would have been far greater than the cost of this intervention. Not only can we provide urgent support now, but the beauty of our scheme is that it will also bring down inflation, helping tackle wider cost of living pressures.”