Liz Truss wrong to repeatedly say energy bills are capped at £2,500

“We have taken action by the government stepping in, making sure that nobody is paying fuel bills of more than £2,500.”

The Prime Minister told BBC Radio Kent this morning that the government was “making sure that nobody is paying fuel bills of more than £2,500”, and made a similar comment to BBC Radio Leeds [8:07], saying “through the energy price guarantee the maximum will be £2,500”. 

This is false, and a mistake the Prime Minister has made repeatedly. Full Fact last wrote about the issue when Ms Truss made the claim on CNN on 25 September. After that claim, Full Fact wrote to the Prime Minister, asking her to acknowledge the error and ensure she described the policy accurately in future.

At other points during her round of interviews on BBC local radio stations this morning, Ms Truss said £2,500 would be the maximum “typical” fuel bill, which is more accurate, though potentially still confusing as it doesn’t explicitly mention usage.

The government’s Energy Price Guarantee does not make sure that nobody pays more than £2,500 for their energy bills. Instead, it caps the price of a unit of gas and electricity—meaning that the typical household with average usage will spend £2,500.

The Department of Business, Energy and Industrial Strategy explained this in a series of tweets just yesterday.

£2,500 is the expected annual energy cost for a 3 bedroom household, based on the Energy Price Guarantee from 1 Oct.

If you use more or less energy than this, your bill could be more or less than £2,500.

2/12 pic.twitter.com/OP8qlKIM85

— Dept for BEIS (@beisgovuk) September 28, 2022

Suggesting there is a hard cap on bills risks vulnerable people thinking they can use as much energy as they want for £2,500, according to MoneySavingExpert founder Martin Lewis.  

In fact, if you use more energy than average, your bills will be more than £2,500 over the year.

What is the Energy Price Guarantee?

Announced by the government on 8 September, the Energy Price Guarantee is intended to reduce the amount that 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, the average 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, a typical household with average use will pay no more than £2,500 a year, for two years, from 1 October.

Some customers will pay more than £2,500

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.  

Image courtesy of Simon Dawson / No10 Downing Street