How does the energy price cap work?

Gas and electricity prices will rise by 10% in England, Scotland and Wales on Tuesday, 1 October.

It means the typical annual dual-fuel bill paid by direct debit will be £1,717, which might prompt some customers to consider switching to a fixed tariff.

Billpayers are also being encouraged to submit a meter reading before the price rise comes in.

The energy price cap covers 28 million households in England, Wales and Scotland and is set every three months, external by the energy regulator Ofgem.

It fixes the maximum price that can be charged for each unit of energy on a standard - or default - tariff for a typical dual-fuel household which pays by direct debit.

Between 1 October and 31 December, gas prices will be capped at 6.24p per kilowatt hour (kWh), and electricity at 24.50p per kWh.

The rise to £1,717 per year for a dual-fuel direct debit household using a typical amount of energy, external is a £149 increase.

Those who pay their bills every three months by cash or cheque will pay £1,829.

The cap does not apply in Northern Ireland, which has its own energy market.

Experts say it is a good idea to submit a meter reading when prices rise.

Doing so avoids being charged on estimated usage at the higher rate.

Fixed-priced deals offer certainty for a set period but, if prices drop, people could find themselves stuck at a higher price.

The forecaster Cornwall Insight, which tracks the energy market, has suggested prices could increase again slightly in January, due to rising wholesale costs paid by suppliers.

It says the typical home could pay £1,762 a year.

Given prices are rising, Ofgem says people should consider fixed deals as an option.

However, it says they should seek independent advice and consider what is most important for them - the lowest price or the security of a fixed deal.

Price comparison site Uswitch says the market for fixes is the best in recent years.

Some deals allow you to fix for a year, some for longer.

Uswitch warns customers should check whether fixed deals have exit fees before signing up and ensure they fully understand the terms of the contract.

Because the price cap changes every three months, it is difficult to know with any certainty whether a fixed tariff is a good deal. The longer the fixed term, the greater the uncertainty.

Your energy bill depends on the overall amount of gas and electricity you use, and how you pay for it.

The type of property you live in, how energy efficient it is, and how many people live there, all make a difference.

The Ofgem cap is based on a "typical household" using 11,500 kWh of gas and 2,700 kWh of electricity a year with a single bill for gas and electricity, which they settle by direct debit.

The vast majority of people pay their bill this way to help spread payments across the year.

Those who pay every three months by cash and cheque are charged more.

From 1 October, households on prepayment meters will pay slightly less than those on direct debit, with a typical bill of £1,669, a rise of £147.

About four million households had prepayment meters in April 2024, according to Ofgem.

Many have been in place for years, but some were installed more recently after customers struggled to pay higher bills.

New rules mean suppliers must give customers more opportunity to clear their debts before switching them to a meter. They cannot be installed at all in certain households.

Standing charges are a fixed daily amount to cover the costs of connecting to a supply.

They are typically 60p a day for electricity and 31p a day for gas, although they vary by region.

Campaigners argue the charges are unfair because they make up a larger part of the bill of low energy users.

Ofgem has outlined options to change standing charges and asked energy suppliers, consumer groups and household bill payers to give their views., external This consultation closed on 20 September.

Separately, the regulator is adding £28 to everyone's bill between April 2024 and March 2025 to cover the cost of dealing with £3.1bn of debt that customers owe to suppliers.

Changes to the winter fuel payment mean more than 10 million pensioners will not receive the money this winter.

Previously, it was paid to all pensioners to help with their energy bills during the coldest part of the year.

But in July, the government said future payments would be made only to those on low incomes who received certain benefits, including pension credit.

This year's payment - worth £200 or £300 depending on individual circumstances - will be paid automatically to eligible pensioners in November or December.

So far 75,000 more people, who previously did not receive pension credit, have made claims for the benefit since the fuel payment policy was announced.

The £500m Household Support Fund,, external which was introduced in September 2021 to help vulnerable customers, had been due to end in autumn 2024.

However, Work and Pensions Secretary Liz Kendall has extended this until March 2025.

The Warm Home Discount scheme, external continues to offer a discount to eligible pensioners and low income households.

The government's Fuel Direct Scheme, external can help people to repay an energy debt directly from their benefit payments.

In addition, suppliers must offer customers affordable payment plans or repayment holidays if they are struggling with bills.

Most suppliers also offer hardship grants.