Energy price cap freeze: Average household will pay £2,500 annually for next two years, says new PM Liz Truss

New Prime Minister Liz Truss has set out her plan to tackle the energy crisis this winter.

In England, the £3,549 price cap that was due to come in October will be reduced to £2,500 for the typical household, and will remain for two years.

It will be in addition to a £400 payment for all households to help with energy bills from October, which was floated earlier this summer.

There will also be a fund set up to support households who pay for their gas and electricity on pre-payment meters.

This means for the average household, yearly energy bills would be similar to what they have been since the cap was raised to £1,971 in April.

It would still mark a 126 per cent rise from the £1,104 cap at the start of 2019.

"This is the moment to be bold. We are facing a global energy crisis and there are no cost-free options," Ms Truss told MPs in the Commons.

She further claims the package will reduce inflation by up to five per cent.

The plan also comes with a suspension of green levies – an environmental charge added to energy bills by the Government for use of non-green fuels.

The price cap is not a maximum on a household bills, but reflects the new price per kWh of energy and what it would cost per year for the average UK household.

The ‘freeze’ – which Liz Truss preferred to call a ‘guarantee’ – is expected to be paid for by borrowing at least £100bn, which will be laid out by Chancellor Kwasi Kawrteng later this month.

Ms Truss ruled out a windfall tax on energy suppliers.

For businesses, Liz Truss says a new scheme will be offered to companies, charities, pubs and restaurants with “equivalent support” for six months, before moving to “focused support” to vulnerable industries after that.

Much of Ms Truss’ speech was a pledge for the UK to bolster its own energy creation means, to the point of becoming a “net energy exporter by 2040”.

It will mean lifting the ban on fracking, new licensing for North Sea fossil fuel extraction, and investment in renewable energies.