UK energy bills frozen for two years

9th September 2022


The new UK prime minister Liz Truss has announced that household energy bills will be frozen at an average of £2,500 a year for two years during the cost-of-living crisis.

From 1 October, a new ‘energy price guarantee’ will limit the price suppliers can charge customers for units of gas, while temporarily removing green levies, worth around £150, from household bills.

This will save the average home £1,000 a year, based on current energy prices, and comes in addition to a £400 discount, which together will bring costs close to where the energy price cap stands today.

The government estimates that the historic intervention will boost growth and curb inflation by 4% to 5%, reducing the cost of servicing the national debt.

Truss said that “decades of short-term thinking” have threatened the UK's energy security, which has been exacerbated by Russia's war in Ukraine. “I’m ending this once and for all,” she declared.

“I’m acting immediately so people and businesses are supported over the next two years, with a new energy price guarantee, and tackling the root cause of the issues by boosting domestic energy supply.

“Extraordinary challenges call for extraordinary measures, ensuring that the UK is never in this situation again.”

The government will provide energy suppliers with the difference between lower prices, and what energy retailers would charge their customers were they not in place.

Schemes previously funded by green levies will also continue to be funded by the government during the two-year period to ensure the UK’s investment in home-grown, secure renewable technologies continues.

Furthermore, as businesses have not benefited from an energy price cap, a new six-month scheme will offer equivalent support as is being provided for consumers.

The announcements are likely to be among the most important of Truss' premiership, which began just days ago.

Reacting to her appointment, IEMA's CEO Sarah Mukhjerjee MBE, said: “IEMA congratulates Liz Truss on becoming the new leader of the Conservative Party and prime minister of the UK. We look forward to working with her new government.

“Clearly the cost-of-energy crisis will be at the top of the new PMs in tray and we would reiterate that tackling this requires a three-pronged approach. Directly supporting bill payers, taking urgent steps to ensure secure energy supplies, and raising the bar on the energy efficiency of our building stock.

“Moreover, we need the new PM to steady the ship on efforts to ensure that the UK reaches its 2050 net-zero target and other targets spilling out of the Environment Act.”

Image credit: iStock


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