“We've made sure that no family, no household is having to pay more than £2,500 on those energy bills”.
During an appearance on CNN at the weekend, Prime Minister Liz Truss incorrectly claimed that “no household” would have to pay more than £2,500 in energy bills under the Energy Price Guarantee.
However, per the government’s own figures on the impact of the Energy Price Guarantee, it’s not the case that “no household” will pay more than £2,500 on their energy bills.
This figure refers to the maximum amount a “typical” household will pay, based on average energy usage. Depending on property type and energy usage, some households will pay more than this, although some will pay less.
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What is the Energy Price Guarantee?
Announced by the government on 8 September, the Energy Price Guarantee is intended to reduce the amount the households will pay for gas and electricity from 1 October 2022.
The policy limits the amount consumers can be charged per unit of gas or electricity. For customers in Great Britain on a standard variable tariff paying by direct debit, this limit will be 34.0p/kWh for electricity and 10.3p/kWh for gas.
A limit will also apply to the rates households on pre-payment meters pay for each unit of energy, though the government says there will be a small difference between the unit costs for a pre-payment meter customer and other bill payers, while households not on standard contracts will receive equivalent support
According to the government, this price cap means that based on the median consumption of households in Great Britain in 2019, the average household will pay £2,500 a year, for two years, from 1 October.
Some customers will pay more than £2,500
Despite Ms Truss’s comments on CNN, it’s not true that under these plans “no family, no household” will pay more than £2,500.
The government’s own figures show that the amount households will pay, even under the new Energy Price Guarantee, will vary. This is because the £2,500 figure refers to average energy use, meaning some households will use more energy, and therefore pay more, while others will use less, and pay less.
For example, according to government figures, based on median consumption figures for 2019, the typical bill for a detached house under the new Energy Price Guarantee will be £3,300, while for a semi-detached house it will be £2,650.
By comparison, the typical bill for someone living in a purpose built flat will be £1,750.
Again, these figures are all based on “typical” consumption, with the actual cost of individual bills varying from household to household based on individual energy usage.
Additionally, the government says that “for the small number of consumers who fixed at a high rate exceeding the October Ofgem price cap”, while their unit rates would be reduced, “their fixed rate tariff will still have a unit rate that is above the [Energy Price Guarantee] rates.”
Capping the unit price of energy is not the only support provided by the government, which is also providing households in Great Britain £400 each to pay energy bills over the next six months. Other support is available for specific groups such as the elderly and the vulnerable.
In response to Full Fact’s request for comment, Downing Street directed us to Ms Truss’s 8 September speech announcing the policy in Parliament, where she said: “A typical household will pay no more than £2,500 per year for each of the next two years”.
Image courtesy of Simon Dawson