Households across the country are bracing themselves for soaring energy bills from April as the price of wholesale gas goes up.
Regulator Ofgem is poised to announce a change in the price cap – which sets what energy firms can charge – which is currently set at £1,300. but the BBC reports that this could go up to as much as £2,000 for 22 million homes.
The Times newspaper reports that ministers have agreed a deal to try and help households as the price rises come in, under what’s been called a ‘rebate and clawback’ scheme.
But what is such an initiative and how do I get a discount on my bill from it? Here’s what we know.
Energy prices: What is the ‘rebate and clawback’ scheme and how do I get a discount on my bill?
The ‘rebate and clawback’ scheme, which was initially reported in the Times newspaper, is set to provide up to £6 billion in Government loans to energy firms so they can reduce their customers’ bills.
Read more: Who sets the energy price cap? Millions to pay whopping £2,000 a year
Effectively, when companies are given the cash, they will lower the bills given to customers using the money from the scheme to do so, by as much as potentially £200. There is no need to apply for this, it should be added to your bill by the energy firm.
But how will the money be paid back to the Government? Essentially, in years after April 2022, consumers will have to stump up a little bit more to pay off the loans. The hope is that energy prices fall so the loans can be paid back without impacting consumers too much.
The whole scheme has yet to be formally announced by Government ministers, but the confirmation could come at the end of this week.
As well as the announcement of that scheme, Government ministers could go forward with an extension of the Warm Home Discount, which shaves off £140 on poorer customers’ bills over the winter months, and other help which is currently available.
Meanwhile, regulator Ofgem is to announce the new energy price cap at 11am tomorrow (Thursday, February 3), rather than next week as households brace themselves for the tough period ahead.