Martin's 12 energy hike must-knows, incl...
New. Energy price cap rise calc - it's up an average 80%, but what will you really pay? 

Plus... Should you fix? What's the standing charge? Will it rise again? Is direct debit cheapest? And more

I've been trying to raise the alarm for months, shouting that action's needed to prevent a potential winter price catastrophe. Well on Friday, that catastrophe crystallised, without any new firm mitigating plans in place.

The regulator, Ofgem, announced a vomit-inducing average 80% rise in the 1 Oct cap, taking a typical bill (not that anyone's bills are typical) to a hideous £3,549/yr - with a substantial further rise likely in Jan - simply unpayable for a decent chunk of the country in fuel poverty.

I did - small p - political media interviews on Friday, calling for further intervention (see a plea to the incoming PM for urgent action), but here I want to focus on the practicals...

1. The cap will rise an average 80% in Oct. If you're in England, Scotland or Wales and aren't on a fixed energy tariff, you, like 85% of homes, are likely on your provider's default standard variable tariff, which is 'protected' by the price cap.

The price cap is somewhat misnamed. In truth, there is NO CAP ON THE MAX YOU PAY FOR ENERGY, it's actually on the underlying rates, so use more and you pay more, plus the cap varies by region...

NEW: Energy price cap rise calculator - what's your actual rise? Use our new Energy price cap rise calc to enter how much energy you use, or how much you pay on direct debit, and what region, and it'll tell you an estimate of what you'll pay. This is likely to vary between 50% and 90% depending on circumstances. Please share with anyone wanting to work out what to budget.

You can also watch my video explainer and Q&A on the change, or read more technicals on how the price cap works.

2. It is actually a cap on standing charges and unit rates. In practical terms, the price cap limits the standing (daily) charge firms can levy, and the rate you pay for each unit of energy used. While the calc's easiest for most, I know some like to see the actual rates. Here are average direct debit rates for 1 Oct - 31 Dec.

• Electricity: Standing charge 46.4p/day (currently 45.3p)
  Unit rate 51.9p/kWh (currently 28.3p)
  
  
• Gas: Standing charge 28.5p/day (currently 27.2p)
  Unit rate 14.8p/kWh (currently 7.4p)

A full list of region-by-region rates for direct debit and prepay is in our Price cap rates guide.

3. You will pay £273/yr even if you use no energy. The daily standing charges that you pay just for having a bill rose hugely in April, and increased a touch more this time. If you have both gas and electricity, the average price cap standing charge is £273/year before you use owt.

I have continually pushed back with Ofgem to try and get this changed, but with little success.

4. On 1 Jan, the price cap will likely rise a FURTHER 50% - take any predictions for after that with a pinch of salt. Ofgem sets the price cap based on a published formula, with the main variable being the publicly available year-ahead wholesale energy rates. This is why the predictions (we use Cornwall Insight's) close to announcement dates are very accurate. Sadly, currently wholesale gas rates are an unthinkable 16 times the average they were over the prior 10 years.

The October price cap will be the first that only lasts three months. Ofgem shortened it, from changing six-monthly, to help protect retail energy firms - we objected, again with little impact.

What is typical use? It's a meaningless figure for individuals, but good for illustrating an average scale of magnitude. It's defined by Ofgem, which lists it as 2,900/kWh of electricity and 12,000/kWh of gas a year. It's in cost per year as that's easy to understand, though of course the next price cap only lasts three months.

5. Direct debit is still the cheapest way to pay. I've seen much confusion about this on social media, so I want to clear it up. The price cap depends on the payment method. Here are the new average price cap rates for someone ON TYPICAL USE.

• Direct debit: Up 80% from £1,971 to £3,549/yr 
• Prepayment: Up 79% from £2,017 to £3,608/yr
• On receipt of bills: Up 79% from £2,100 to £3,764/yr

So the prepay cap is 2% more than direct debit, receipt of bills 6% more (it can vary by firm - we're going to do some work on that).

Ditching direct debit may help with your cash flow if your direct debit is set too high (try to get them to lower it - see your direct debit rights), but it's important to understand that in the long run you'll pay more, whereas if you overpay while on direct debit you're eventually due that money back.

6. Should you fix? I never thought I'd write this... at the moment the predictions are, on average, over the next year, that the price cap will be roughly 145% more than it is now (ie, two and a half times). So if you can find a fix at less than that, it may be worth it.

There is a lot of crystal ball gazing in this, so we can never be, and have never promised to be, right, but see my Should I fix and what are the best fixes? guide for our latest info.

PS: The MSE team have updated the numbers for me. I wasn't due back to work this week, but felt writing this bit of the email was so important I needed to do it myself. They've kindly done the guides though.

7. Can you reduce your energy usage? Obviously, cutting use cuts bills - and hopefully there are cuts you can make to improve efficiency that don't impact lifestyle too much.

- Start with Energy saving tips.
- Add in the Energy mythbusting guide for less clear-cut issues.
- Really struggling? See our Heat the human not the home guide (though thankfully the summer warmth helps right now).

8. Suppliers will knock £400 off every energy bill over the next six months. In May, the Government announced a non-repayable grant to come off electricity bills, paid at roughly £66 a month from October to March. It's done via electricity bills, as that is more universal than gas.

Some will get the money paid directly into their accounts, others their direct debits reduced, and some on prepayment meters will be issued vouchers. See the full £400 energy grant info.

Prepay customer? One concern, as credit is paid towards your electricity use, is what if you're short on gas? You'll see in the list that some firms, but not enough, are making the credit transferable. It's an issue we're pushing on.

9. Money for those on benefits, with disabilities & pensioners. There is targeted support being paid out at different stages. Click the links for the full info on the payment & timings...

- BENEFITS: £650 payment
- STATE PENSIONERS: £300 top-up
- DISABLED: £150 for certain disability benefits

10. What to do if you're struggling now, or will be in October? If you're struggling, it's always worth talking to your energy firm - be polite and straight with it - and make sure you explain if you're vulnerable. There can also be hardship & debt grants from energy suppliers.

Our full What to do if you're struggling to pay energy bills guide includes energy and debt help charities that may be able to suggest something - though they, like me, are limited in the options they can offer right now to help with the scale of the problems.

11. If you can, start putting money aside now. This will be a pipe dream for many. Yet for those who do have savings or currently spend less than you earn, putting some aside or even, unbelievably, asking for your energy direct debit to rise should ease the winter cash-flow pain.

12. It's tough to save on energy bills, but many can still make large savings elsewhere. Of course those who've already cut to the bone won't be able to do any more, but many others, for whom the scale of the challenge is just dawning, should see this as a clarion call to check all your outgoings. Here are a few examples...

- Family income under £40,000/yr? Do a 10-minute benefits eligibility check. I'm not saying you will be eligible, just that it is worth checking. Some discover they're due £1,000s.
- Had the same broadband provider for years? You're likely out of contract. Check if you can cut £100s of broadband costs.
- Got more or the same rooms in your house than people? If you're in Eng or Wales, check if you can save £100s with a water meter.
- Are you paying interest on credit card debt? Use the 0% balance transfer eligibility checker to see if you can shift the debt to interest-free.

These are just scratching the surface, do check our full Money makeover guide to go through everything. And clearly, we'll endeavour to provide help to mitigate the rises as much as we can, in this weekly email and on the site/app.