Energy price cap to hit £2,800 in October 

Britain's energy price cap is expected to hit £2,800 in October, meaning households will pay 42pc more than do they currently do.

The price cap had already increased to £1,971 on April 1 but will rise again in October. The chief executive of Ofgem, the energy regulator that sets the price cap, has now reportedly warned Chancellor Rishi Sunak of the hike.

It will pile more pressure on to already struggling households and comes alongside an inflation rate of 9pc and higher taxes since last month.

Traditionally, the solution to rising gas and electricity tariffs was for customers to shop around for a better deal. However, doing so could now leave households hundreds of pounds out of pocket. Telegraph Money takes you through the state of the energy market and how to navigate ever-increasing bills.

What is the energy price cap?

The price cap limits how much energy firms can charge households for each unit of gas or electricity, and the proposed new cap of £2,800 is based on what the average British household will pay. In reality, how much you pay is unlimited and depends on how much energy you use.

Regulator Ofgem sets the price cap based on a "broad estimate" of how much it costs a supplier to provide gas and electricity services to a customer.

The calculation is mainly made up of wholesale energy costs, network costs such as maintaining pipes and wires, policy costs including the government's social and environmental schemes, operating costs such as billing and metering services and VAT.

Does my energy supplier offer a price cap protected tariff?

All suppliers that offer a default tariff have to cap it in line with the rules of Ofgem, the regulator, apart from a few select "green" suppliers. However, they are not required to actively market these deals, which can sometimes make them difficult to find.

In some cases, providers have removed default tariffs from their websites. This means customers may be unaware it would cost them less simply to roll on to their supplier's default tariff rather than to switch deals. 

Your supplier has to tell you whether it offers a default tariff if you ask it directly. 

What happens if my energy supplier collapses?

If your supplier goes out of business, Ofgem will switch you to a “supplier of last resort” and any credit with the older energy provider will be transferred across. Affected households should take meter readings as they will need to pass these on to their new supplier. 

What has the Government done to help?

The Chancellor, Rishi Sunak, has announced billions of pounds in state support to ease the cost of spiralling energy bills on families.

A £200 government subsidy will be given to 28 million households to lessen the impact of the price cap rise. An upfront discount of £200 will be offered from October, with the Government meeting the costs. The discount will be automatically recovered from bills in equal £40 instalments over the next five years. 

This repayment will begin in 2023. Households in England in council tax bands A to D will also receive a further £150 rebate. These payments will be made by local authorities from April and will not need to be repaid. 

The Government said this one-off payment would benefit around 80pc of all homes in England and is £1bn more generous and more targeted towards lower-income families than a VAT cut on energy bills. 

How to cut energy bills and save money 

Cutting down on the energy you consume, using it at the right time or generating some of your own will take on added importance. 

Changes to your home to improve its heat retention could shave hundreds of pounds from your energy bill. 

Meanwhile British homes have 10 unused items plugged in and switched on at any one time on average.

Leaving the 10 most electricity-hungry products on standby all year round costs consumers £2.2bn more than if they were turned off at the plug. Televisions on standby cost more than £430m in wasted electricity per year, Utilita said. 

A TV left on standby all year adds £16 a year to a household's electricity bill, while a printer or scanner adds £6.50. The amount per appliance is relatively small, but quickly adds up when multiple appliances are left on.