Prime minister Liz Truss plans energy price cap: Here's what she plans to do, who it will help households and businesses, how much your bill may cost, and more

Liz Truss today announced a price cap on energy bills

Prime minister Liz Truss has unveiled the government’s plan to limit the price suppliers can charge customers for units of gas, replacing the existing price cap which was due to see households of two adults and a young child spending £3,549 a year from October.

Now the planned price freeze aims to keep that average household bill to £2,500 a year – almost double the average annual bill of approximately £1,400 in 2021.

The cap on prices will be in place for two years, the prime minister said in her speech in the House of Commons today.

Prime Minister Liz Truss speaking in the House of Commons to set out her energy plan to shield households and businesses from soaring energy bills. Picture: PA.

For businesses and other non-domestic users such as schools and hospitals, which have not been covered by the existing price cap, a six-month scheme will offer equivalent support.

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After that there will be ongoing support for the most vulnerable industries, with a review in three months’ time to decide where the help should be targeted.

Truss has ruled out another windfall tax on energy firms' profits, arguing it would deter investment

Addressing parliament, Ms Truss said: ‘This is the moment to be bold. We are facing a global energy crisis.

She warned: ‘There are no cost free options. There will be a cost for this intervention.’

Kwasi Kwarteng, the chancellor, will give details of the costs when he makes a fiscal statement later this month.

The government predicts that the plan will cut inflation by 5 percentage points – with it currently standing at more than 10 per cent, while some analysts had forecast that it could reach 20 per cent early next year.

The energy bills plan will save the average household £1,000 a year, Truss said, and comes in addition to the £400 energy bills discount that has previously been announced.

This figure takes account of the removal of green levies – worth around £150 per household - and it will supersed the existing energy price cap.

The ‘energy price guarantee’ will apply in England, Scotland and Wales from October 1, with the same level of support made available to Northern Ireland, which has a separate energy market.