BRITS could face energy bills of up to £5,000 from April, it was reported last night.
Chancellor Jeremy Hunt said that the energy price guarantee, which limits average bills to £2,500, will come to an end in the spring.
Energy bills were initially set to be frozen for the typical household for two years, but this policy will now end in April, pending a government review.
After April, help will be targeted at hard-up households, although details of this were not revealed yesterday.
It could see some families’ energy bills skyrocket to as much as £5,000, according to The Times.
It comes as the new Chancellor announced a number of mega mini-Budget U-turns yesterday in a bid to calm markets.
He ripped up the planned 1p cut to the basic tax rate indefinitely, as well as scrapping VAT for foreign tourists visiting the UK and freezing alcohol duty rates from next year.
He also announced the energy price guarantee scheme, which rolled out in October 1, will only be in place until April – and it could mean the £2,500 cap will be ditched after that.
It could mean millions will see their energy bills soar once the guarantee is up.
Mr Hunt said a Treasury-led review on how energy bills will be supported after April will be launched.
He said help after this point would be targeted to those most affected by big price rises, and will incentivise energy efficiency.
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He said it “would not be responsible” to carry on the cap after that considering the “volatility” of the energy market.
The Energy Price Guarantee is a cap just on what firms can charge customers for each unit of gas and electricity.
This means that your bill could be higher depending on how much energy you use – so if you use more, expect to pay more.
The Prime Minister Liz Truss‘ initial plan was due to save the average household around £1,000 a year, and protects billpayers from further expected rises over the coming months.
Before the guarantee, bills were expected to soar this winter to over £3,500.
Instead, the most hard-up households will have the wholesale price of gas and electricity capped, while everyone else will no longer be protected from market prices.
This would mean that the prices for each unit of gas and electricity could fluctuate daily and lead to higher bills.
Laura Suter, head of personal finance at AJ Bell, said: “Scrapping all but six months of the Energy Price Guarantee will send shockwaves through households in the UK, who are once again going to be exposed to soaring energy prices and the prospect of a struggle to pay their bills.
“The indication from Mr Hunt is that help will be targeted at those who need it the most from April onwards, rather than universal support regardless of income. However, there’s no guarantee that the support will be meaningful after April.”
What energy bill help is coming?
From October the first, all households will start to receive a £400 energy bill discount.
The payment will be dished out by your energy supplier and will be split across six discounts between October and March next year.
Households will receive a £66 energy bill discount in October and November and a discount worth £67 in December, January, February and March.
In November, a £300 one-off “Pensioner Cost of Living Payment” will be paid out to eight million households.
Millions of households are in line to get the £150 Warm Home Discount between December and March 2023.