PM announces a new energy bills scheme that will reduce the impact of the planned October price cap rise.

On 8 September, the government announced changes to how energy bills will be charged to help reduce the impact of the proposed October price cap. The new Prime Minister, Liz Truss, has said that average bills will be held at £2,500, under a scheme called the Energy Price Guarantee (EPG), for the next two years.

Energy Price Guarantee.

The October price cap, announced by Ofgem (26 August) will no longer be implemented in full for customers. The government's Energy Price Guarantee limits the amount you can be charged per unit of gas or electricity. So although your total bill will still be determined by how much energy you use, your prices won't rise by as much as previously expected under the price cap.

To limit the amount customers' bills go up by, the government will compensate energy firms for the difference between the wholesale price for gas and electricity they pay and the amount they can charge customers.

From 1 October the government will supplement what customers pay for energy which means that instead of the typical household dual-fuel bill rising to £3,549, a typical household will now see an annual bill of £2,500.

You will still pay for the gas and electricity you use. But the government's Energy Price Guaranteegovernment's Energy Price Guarantee will limit the price that we can charge for each unit of energy. However, if you use more gas or electricity, you will pay more. The scheme does not cap your bill at £2,500, your bill amount is still based on how much energy you use.

The government says that it will pay for the subsidy, which means that customers will not be expected to repay the support. From 1 October customers will also receive the government's Energy Bills Support Scheme (£400) support. More information on this can be found on our EBSS webpage.

What this means for customers

Standard variable tariff (SVT) customers

The average unit price for dual fuel customers paying by Direct Debit will be limited to 34p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1 October. These unit prices have been passed from the government to us to ensure that they are used to calculate bills.

The average unit price for dual fuel customers paying on receipt of their bill (cash/cheque) will be limited to 36.8p/kWh for electricity and 11.1p/kWh for gas, inclusive of VAT, from 1 October. These unit prices have been passed from the government to us to ensure that they are used to calculate bills.

We will adjust standard variable tariffs automatically. Customers on standard variable tariffs do not need to take any action to get the benefits of this Energy Price Guarantee (EPG) scheme. We are contacting customers directly, over the coming days, to confirm what the EPG means for them and how, together with the Energy Bill Support Scheme (EBSS), it will affect their bills.

Fixed tariff customers

For those customers on fixed rate tariffs paying by Direct Debit, a 'floor' unit price will come into effect on 1 October. For gas, it will average at 10.3p/kWh and for electricity at 34p/kWh. We are introducing a floor unit price because some people will have fixed at much lower prices some time ago, meaning their annual payments will already be below the £2,500 average set by the government's Energy Price Guarantee.

Unit price reductions of up to 17p/kWh for electricity and 4.2p/kWh for gas will apply to fixed tariff customers to bring their unit prices down to, but not below, the floor unit price. Customers on fixed rate tariffs that are already below the floor unit prices will continue to enjoy those low prices, but will not receive a further discount for the duration of their fixed term.

We will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme. We are contacting customers directly, over the coming days, to confirm what the Energy Price Guarantee (EPG) means for them and how, together with the Energy Bill Support Scheme (EBSS), it will affect their bills.

Standing charges

Average standing charges will remain in line with the levels set by Ofgem for the default tariff cap from 1 October, at 46p per day for electricity and 28p per day for gas, for a typical dual fuel customer paying by Direct Debit.

Average standing charges will remain in line with the levels set by Ofgem for the default tariff cap from 1 October, at 52.4p per day for electricity and 33.5p per day for gas, for a typical dual fuel customer paying on receipt of bill (cash/cheque).

We are contacting customers directly, over the coming days, to confirm what the Energy Price Guarantee (EPG) means for them and how, together with the Energy Bill Support Scheme (EBSS), it will affect their bills.

Ofgem's price cap.

Ofgem has announced that from 1 October 2022, the price cap for customers on a standard variable tariff will increase to £3,549 if they pay by Direct Debit and to £3,764 if they pay any other way. For customers with a prepayment meter, the price cap will increase to £3,608.

In August 2022, Ofgem announced that the review period for the price cap will be reduced from six months to every three months (quarterly). This review period has now been frozen by the government with the announcement of the Energy Price Guarantee scheme that will run for two years.

What is the price cap?

The price cap was introduced by the government back in 2019 as backstop protection for customers on an energy tariff with standard variable rates.

Electricity and gas prices are reviewed and updated by the energy regulator Ofgem. The price cap calculated and set by Ofgem to reflect changes in industry costs. The price cap level is set for customers in England, Wales and Scotland. Retail energy prices in Northern Ireland are not subject to a cap. From 1 October 2022 the price cap level will be reviewed every three months (previously six months).

How will the Energy Bills Support Scheme work?

In May 2022 the government announced several support measures to help households with rising energy bills. The main measure, announced by the Chancellor, is £400 off electricity bills for domestic customers across England, Wales and Scotland. Known as the Energy Bills Support Scheme (EBSS) this money will start to be credited to customers accounts from 1 October 2022 in six, monthly instalments. This money does not need to be paid back.

Each energy supplier has been asked to pay customers who have an electricity supply, so this means if your electricity is with us, you'll get your payment from Sainsbury's Energy. If you only have your gas with us, then you'll get your rebate through your electricity supplier.

You'll see a discount of £66 applied to your energy bills in October and November, and £67 a month from December to March 2023.

We'll be paying the money differently, depending on how you pay for your fuel now:

  • Fixed Direct Debit customers will receive the money automatically as a deduction to their monthly Direct Debit.
  • Pay on receipt of bill customers and regular cash payment customers will see the money automatically applied as a credit to their energy accounts in the first week of each month. This will show as a credit in the payments section of their monthly bill.
  • Smart prepayment customers will see the money credited directly to their meters as a top up in the first week of each month.
  • Traditional prepayment customers will be provided with vouchers in the first week of each month. You'll need to redeem these at your usual top-up point in a similar way to the Warm Home Discount.

The government has published more information about the Energy Bills Support Scheme on their website.

What other help is available?

  • A £150 non-repayable Council Tax Rebate payment for all households that are liable for Council Tax in Bands A-D in England.
  • A £650 payment will be made to more than eight million low-income households who receive Universal Credit, tax credits, pension credit and other means-tested benefits. The first payment of £326 started appearing in people's bank accounts from 14 July. To be eligible for the first instalment, people must have started a successful benefits claim by 25 May.
  • £144 million of discretionary funding for Local Authorities to support households who need support but are not eligible for the Council Tax Rebate. Further details to be announced.
  • The government is continuing with plans to expand eligibility for the Warm Home Discount and increase the rebate value to £150 each year (from £140). More detail will be published shortly in the government response to the consultation on this.
  • The Winter Fuel Payment provides between £250 and £600 help to pay heating bills for customers born before 25 September 1956.

Why are energy prices rising?

Like all energy suppliers, we buy energy from the wholesale energy market to then distribute it to you, our customers. Even renewable energy needs to be bought in this way.

The cost of energy in the market has increased significantly this year to an unprecedented high. Since this cost makes up a large proportion of your bill, we need to increase the prices on our price plans too.

Am I affected by the price cap?

If you're on our standard variable tariff, we'll be writing to you in the coming weeks to explain how these changes affect you. If you're on our Fix & Reward Tariffs, your prices will stay the same until your tariff term ends. We'll contact you when your fixed tariff term is about to end with guidance for what to do.

You can check which tariff you are on by logging in to your account.

Should I switch to another tariff?

This really does depend on what's right for you and your home. Any changes to our prices will be reflected in your dashboard in the coming weeks.

Remember that the price cap level will not increase until 1st October. This is when relevant changes to your tariff will be observed and you will start to pay any new prices as a result.

So, you still have time to think about next steps.

If you are one of our standard variable tariff customers, you will be receiving an email or letter keeping you updated with how this price cap will be affecting you with advice on what to do.

If you do decide to switch to our Fix & Reward tariffs, you'll be paying the same price for a set period of time and we have no exit fees so you still have flexibility.

Please bear in mind that we may need you to have a smart meter fitted, pay by Direct Debit and manage your account online, so please do read the small print before signing up.

We recommend checking your tariff online in the coming weeks.

It's also good to know that other factors may impact how much your energy bills cost including:

  • How you pay.
  • The type of energy meter you use.
  • Your energy usage.

There are also lots of ways you can reduce your energy usage and therefore how much you will pay. Check out these helpful tips for increasing your energy efficiency.

What support is available?

This is a worrying time for everyone as the cost of energy continues to go up. We understand that you may be struggling to pay. Here's where you can find support.

Warm Home Discount.

The Warm Home Discount is there to help those who are struggling to keep up with their energy payments. Customers on the scheme will get a one-off, annual discount of £150 (inclusive of VAT) on their electricity bill. It's a scheme supported by the government and energy suppliers. There is a deadline to apply so please check the link below.

Find out if you are eligible.

The Green Home Grant.

The Green Homes Grant is a £2 billion scheme, launched by the government, to help homeowners pay for energy saving improvements for their homes by installing measures such as wall insulation, solar panels and air source heat pumps.

This is to improve the warmth of homes, cut energy bills and help the UK to be zero-carbon by 2050.

For more information take a look at the Green Homes Grant blog from our partner E.ON Next.

Homes for Living.

Homes for Living is a scheme designed to support your mobility, wellbeing and independence, offering free and attractive home aids and equipment designed to give you more freedom in your home.

Our partner E.ON has put all the info together in a useful landing page.

The E.ON Next Energy Fund

The E.ON Next Energy Fund has been created to help customers who are experiencing financial hardship. Sainsbury's Energy is powered by E.ON Next which means our customers can also access it.

There are two ways this fund can help and support you:

  • To help with paying your gas and electricity bills through grants.
  • To replace appliances such as a cooker, fridge, fridge-freezer or washing machine if yours is broken or in poor condition.

Find out if you're eligible.

Debt advice resources.

There are also external debt advice resources you can get through Citizens Advice and StepChange.

If you are also worried about how money can have an impact on your mental health. We advise you to talk to our charity partner Mind.

Talk to Customer Service Team if you are having difficulty.

Our customer service team are here to help if you are concerned about the impact of the price cap rise on your energy bills. If you are struggling to pay, please visit our help page to find out more about how we can support you.

You can reach out to our Energy Specialists for personal advice on Facebook and Twitter, or send us an email: hi@sainsburysenergy.com.