Why do energy prices have to go up? And other questions

Energy bills are set to rise by nearly £700 this year, following the lifting of the energy price cap.

The BBC's personal finance correspondent Kevin Peachey answers some of your questions about the situation.

Why does the price have to go up? Antony Vidler

The wholesale price of gas has gone up over the past year across the world, due to a number of factors.

These included a worldwide squeeze on energy supplies, a cold winter in 2020/21 and a relatively windless summer in 2021, which made it difficult to generate wind energy.

However, UK gas suppliers have been limited in how much of this price rise they were able to pass on to consumers so far. This is because of the energy price cap - the maximum which the UK energy regulator allows them to charge customers.

This resulted in several gas suppliers going out of business last year, and made yesterday's announcement of a significant rise in the price cap inevitable.

You will not be surprised to hear that it is a record rise.

To be clear, the price cap affects those on variable or default tariffs. That includes people who have not switched for some time, those whose fixed deals have expired, and those whose suppliers went bust and were shifted to a new tariff.

Anyone on a fixed deal is unaffected. However, were you to try to sign up to a fixed deal now, it would be even more expensive than these variable tariffs.

Why are energy prices rising for customers on eco tariffs, if their energy comes from renewables? Martin Brimacombe

This is because eco providers are still affected by wholesale prices which are driving bill rises.

These providers try to buy in advance from renewable sources, and invest in schemes for renewable generation.

But ultimately, at present, they have to source electricity from the National Grid - some of which is generated from gas.

As a result, they are not immune to the situation in the wider market, and prices charged by renewable generators have been going up too.

If all this is being caused by the increase in wholesale gas prices, why is the cost of electricity going through the roof as well? Peter

That is a question lots of people are asking.

The basic answer is that the UK is heavily reliant on gas to produce electricity. Gas generates about a third of the country's electricity.

So when gas is in high demand, and scarce - as has been the case for some months - then that affects the price of electricity too.

Will people who don't pay council tax (such as students and those on benefits) receive anything? Ben Gardner

Chancellor Rishi Sunak has said that households in England in council tax bands A to D will receive a £150 rebate in April.

As well as this, councils in England will receive a share of £144m from the Treasury.

They can use that money to help people who they regard as vulnerable or on low incomes, but who either do not pay council tax or who live in band E to H properties.

There is also money going to the rest of the UK in order to match these rebates in England.

Do we know how the instalments will be spread out for paying back the £200 rebate? Lulu

Rishi Sunak announced a repayable £200 discount on bills for homes in England, Wales and Scotland from October.

The exact mechanics of how this will be knocked off the bills, and repaid over the subsequent five years, have yet to be explained in detail.

However, you are expected to have to pay instalments of £40 in each of the five years from April 2023 through your bill. This indicates there is no interest to be paid.

What help will there be for people on pre-payment meters? Karl Lovelight

The support announced by the chancellor on Thursday covers people who use pre-payment meters too.

The process of giving you the temporary discount on bills is a little more complex - the details are still to be ironed out.

In all likelihood, anyone on a newer "smart" pre-payment meter will get the funds transferred automatically.

About two million people are on old-style pre-payment meters. They will probably need to redeem a voucher.