As the cost of living crisis grows and sees more families call for help, plans to reduce bills for households using less energy during peak times are expected.

It comes as the energy regulator Ofgem announced that there would be an 80% rise on the current cap making it £3,549.

The new cap starts on October 1 and will see 24 million households pay for their energy. 

What is the energy price cap?

Put in place by Ofgem, the price cap is the maximum amount that companies can charge households per unit of energy they use (kilowatt hour or kWh on your bills).

The price cap will also limit how much energy firms can charge customers for their standing charges (connecting to the grid). 

Ofgem has set the cap depending on how much energy companies need to pay for electricity and gas to supply households. 

How to reduce your energy bills

How does the energy price cap work?

As stated by the Money Saving Expert website: "The price cap sets a limit on the maximum amount suppliers can charge for each unit of gas and electricity you use and sets a maximum daily standing charge (what you pay to have your home connected to the grid)."

This means that there is no upper limit to what a household would pay. If you use more energy you pay more, and if you use less energy you pay less.

As the MSE website states: "It only applies to providers' standard and default tariffs, so if you're on a fixed-term energy deal, the cap doesn't apply. If you've not switched in the last year or so, it's likely you're on a capped tariff."

Will I pay more as the energy price cap rises? 

With the energy price cap increasing to £3,549 it will see more than 24 million household bills increase. 

It comes as the price rise is also expected to see many people forced into not being able to afford to heat their homes.

The energy company E.on UK suggests that nearly one in eight homes are struggling to pay their bills, adding that it could rise to 40 percent by October.