Energy Bills Support F&Qs
Energy Price Guarantee
What is the Energy Price Guarantee (EPG)?
The Energy Price Guarantee will reduce the unit cost of electricity and gas for six months from October 2022, so that energy bills from October to end-March will be equivalent to £2500 on an annual basis for the typical household. The Energy Price Guarantee will save the typical household around £700 this winter.
The scheme will be reviewed after 6 months and a targeted version of the scheme will thereafter be introduced.
Energy suppliers will be fully compensated by the government for the savings delivered to households.
Your actual bill and savings could be higher or lower depending on the size of your home, how well it is insulated, how many people live there and how much energy you use. £150 of this saving will be delivered by temporarily suspending environmental and social costs (including green levies) from being passed onto consumer bills. These costs will be transferred to the government, while customers still benefit from the low-carbon electricity generation. Payment of the Warm Home Discount will be unaffected.
The Energy Price Guarantee limits the amount you can be charged per unit of gas or electricity, so your exact bill amount will continue to be influenced by how much energy you use. There is no need to apply, and there’s no need to contact your energy supplier; the discount is automatic.
How does the EPG work if you are on a standard variable tariff?
The average unit price for dual fuel customers on standard variable tariffs, subject to Ofgem’s price cap, paying by direct debit will be limited to 34.0p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1 October.
These are average unit prices, the unit rate itself varies by region and the full list of rates have been passed to suppliers to ensure that they are used to calculate bills in Great Britain from 1 October.
Energy suppliers will adjust standard variable tariffs automatically. Customers on standard variable tariffs do not need to take any action to get the benefits of this scheme. The Energy Bills Support Scheme (£400 discount) will also be applied as a monthly or quarterly discount to your bill.
How does the EPG work if you are on a variable tariff not subject to the price cap?
Variable tariffs which were not subject to Ofgem’s price cap (which are known as having a derogation), for instance certain 100% renewable energy tariffs, will receive the full unit rate discount: reductions of 17p/kWh for electricity and 4.2p/kWh for gas.
If originally priced at a higher level than Ofgem’s price cap, then the resulting unit rates will be above the standard variable EPG unit rates.
The Energy Bills Support Scheme (£400 discount) will also be applied as a monthly or quarterly discount to your bill.
How does the EPG work if you are on a pre-payment meter?
For pre-payment meter customers, the government will make sure you receive the full benefit of both the Energy Price Guarantee and the Energy Bills Support Scheme. For the Energy Price Guarantee, you will not need vouchers, but to benefit from the EBSS you may need them.
The Energy Price Guarantee will be applied to the rate you pay for each unit of energy, so the money you put on the meter will last longer than would otherwise have been the case this winter. There’s no need to apply and you won’t need any vouchers. The discount will be applied automatically by your supplier.
As is the case with the price cap, under the Energy Price Guarantee there will continue to be a small difference between the unit cost for a pre-payment meter customer and other bill payers.
If you are on a prepayment meter, you will also receive the £400 Energy Bills Support Scheme. These payments will be made monthly from October to March, totalling £400 overall.
You will receive the Energy Bills Support Scheme discount from the first week of each month. Smart meters will be credited automatically. If you have a traditional prepayment meter you’ll get the discount automatically in one of the following ways, as:
- redeemable vouchers, sent by SMS text, email or post;
- an automatic credit when you top up at your usual top up point
Your electricity supplier will let you know in advance how you will get your discount. Your supplier should have your contact details, but if you’re not sure or you don’t receive any information from them, you should check that they have your latest number and email. If you get vouchers you’ll need to redeem them at a top-up point. Your supplier will tell you where to redeem them, for example at a Post Office branch or a PayPoint shop. Payzone outlets are unable to accept the vouchers.
How does the EPG work if you are on a fixed rate tariff?
Fixed tariff customers will have the same support where appropriate. Unit price reductions of up to 17p/kWh for electricity and 4.2p/kWh for gas will apply to fixed tariff customers that currently have unit rates above the EPG.
A ‘floor’ unit price for gas averaging at 10.3p/kWh and for electricity averaging at 34p/kWh for direct debit customers will be introduced, because some people will have fixed at much lower prices some time ago, meaning their annual payments will already be below the £2,500 average.
Customers on fixed rate tariffs that are already below the floor unit prices will continue to enjoy those low rates, but will not receive a further discount for the duration of their fixed term.
For the small number of consumers who fixed at a high rate exceeding the October Ofgem price cap of £3,549, they will receive the full discount of 17p for electricity and 4.2p for gas. However, given the higher starting point, their fixed rate tariff will still have a unit rate that is above the EPG rates.
Energy suppliers will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme. Any transfer to a different tariff is a matter for suppliers.
The Energy Bills Support Scheme will be paid on top of this as a monthly or quarterly discount to your bill, totalling £400 from October to March.
How do standing charges work with the EPG?
Average standing charges for customers on default tariffs will remain capped in line with the levels set (in Great Britain) by Ofgem for the default tariff cap from 1 October, at 46p per day for electricity and 28p per day for gas, for a typical dual fuel customer paying by direct debit. Standing charges for households in Northern Ireland will also be unaffected.
What is the Energy Bills Support Scheme (EBSS)?
The Energy Bills Support Scheme (£400 discount) will be applied automatically to customers with a domestic electricity meter. In Great Britain customers will receive the Energy Bills Support Scheme as a discount on monthly or quarterly bills, or as a refund direct to their bank account (depending on your supplier). Those with a smart prepayment meter will have the credit applied to their meter directly. Those with traditional prepayment meters will receive Special Action Messages or vouchers which will need to be redeemed at the Post Office or a PayPoint outlet, as designated by the supplier. Payments will be £66 in October, £66 in November, and £67 from December to March, totalling £400. In Northern Ireland we are working to deliver the £400 discount as soon as possible.
What is EBSS Alternative Funding?
Households who are not eligible for the Energy Bills Support Scheme, such as residents of park homes, will receive equivalent support which will be backdated to October. An announcement on eligibility and how this will be paid will be made later.
For people not connected to the grid
What about households not on standard gas or electricity contracts?
These households include those living in park homes or on heat networks – and so outside the scheme. They will receive support equivalent to both the Energy Price Guarantee and the Energy Bills Support Scheme. The business which has the direct commercial relationship with the energy supplier (for example the park owner) will receive support via the Energy Bill Relief Scheme and we will act now to introduce legislation so that they have to pass the benefit directly on to residents. Customers do not need to take any action in order to receive this support, which they will receive by the end of the year. However, all domestic households will also receive the £400 Energy Bills Support Scheme. The Government is working through exactly how different groups of consumers will receive this, using the most practical and tested routes available.
What about households that use gas for heating, but don’t use electricity?
Those households who are connected to the electricity network but who use fuels other than gas, such as heating oil, to heat their homes will still receive support through the Energy Price Guarantee for their electricity costs, as well as the Energy Bills Support Scheme.
If you are not able to receive a support for your heating costs through the Energy Price Guarantee (for example because you live in an area of the UK that is not served by the gas grid), we will also provide an additional payment of £100 to compensate for the rising costs of other fuels such as heating oil.
This is intended to guarantee you will receive support equivalent to those on both the electricity and gas grid for the total cost of your energy.
Will tenants benefit if they pay for your energy as part of their rent?
Landlords will benefit from the Energy Price Guarantee if they have a domestic electricity and/or gas contract with a licensed electricity and/or gas supplier and should reflect this in the price they charge you from 1 October. Similarly, they will receive the Energy Bills Support Scheme and should pass it on to you. We will act now to introduce legislation to ensure this happens.
Landlords should pass on the discount irrespective of how you pay for your energy use. If they charge based on usage, they must do this at the same price as they pay, including the Energy Price Guarantee (see Ofgem’s guidance on ensuring customers are being charged no more than they should). If, on the other hand, you pay an “all inclusive” rent incorporating a fixed charge for energy use, your landlord should pass the Energy Price Guarantee and Energy Bills Support Scheme benefits to you if provided for in your tenancy agreement. If your landlord has a non-domestic contract, they will benefit from the Energy Bill Relief Scheme and should pass the savings on to you.
How will the Energy Price Guarantee (EPG) and Energy Bills Support Scheme (EBSS) be applied to energy bills in Northern Ireland?
For customers in Northern Ireland, the EPG and EBSS will work very similarly to those in Great Britain – households will receive an equivalent level of support. There will be some ways in which the schemes will operate differently, because of the different way the electricity and gas markets operate. For the EPG, the scheme will still work through electricity and gas bills.
For pre-payment meter customers in Northern Ireland, the Energy Price Guarantee will be applied to the rate you pay for each unit of energy at the same rate as for all other customers (17p/kWh for electricity and 4.2p/kWh for gas), so the money you put on the meter will last longer than would otherwise have been the case this winter.
Households in Northern Ireland will also receive a £400 discount on bills through the Northern Ireland Energy Bills Support Scheme. Customers do not need to take any action to receive support. More information will be published soon.
Customers in Northern Ireland who are not able to benefit from the Energy Price Guarantee, such as those using heating oil, will receive an additional payment of £100 to compensate for price increases in those alternative fuels. This is intended to guarantee you will receive support equivalent to those on both the electricity and gas grid for the total cost of your energy. More details on this will be set out soon.
The EPG’s delivery and legislative approach will diverge slightly to reflect the particular energy market arrangements in Northern Ireland.
What is the Energy Bill Support Scheme (EBSS) Alternative Funding?
This scheme will provide the £400 of support for households across the UK that would otherwise miss out on the Energy Bills Support Scheme, as they do not have a domestic electricity contract. The Alternative Funding will be made available for this winter, with an announcement on this in due course. The Bill will provide powers to deliver the funding through local authorities.
Will Northern Ireland also have the Energy Bills Support Scheme?
NI EBSS will also provide £400 of support to households in Northern Ireland, with a similar delivery model to the Energy Bills Support Scheme in Great Britain.
How will the Alternative Fuel Payments (Domestic) scheme work?
This scheme will deliver a one-off £100 payment to UK households who are not on the mains gas grid and therefore use alternative fuels, like heating oil, to heat their homes.
We are aiming to make this process as simple as possible for customers. Households eligible for these payments in Great Britain will receive £100 as a credit on their electricity bill this winter. For Northern Ireland the Government is working with electricity suppliers to explore how the payment could be delivered via electricity bills under a similar delivery model to EBSS.
How long will the Alternative Fuel Payment apply for and is there the possibility to extend?
The Alternative Fuel Payment will provide £100 to support households who do not use mains gas for heating. It is designed to compensate for the rise in the price of heating oil and other alternative fuels over the year to September 2022 in a way which is equivalent to the support received by people who heat their homes using mains gas (via the Energy Price Guarantee)
As the £100 Alternative Fuel Payment is designed to account for increases in the price of heating oil and other alternative fuels that have already happened (over the year to September 2022), the Government is committed to continued monitoring of prices over the coming months and will consider further intervention if required to protect UK households from extraordinary fuel prices.
What about households which use alternative fuels but do not have an electricity meter?
Households who are eligible for but who do not receive AFP, for example because they do not have a relationship with an electricity supplier, will receive the £100 via the AFP Discretionary Fund. Details of how to access this fund will be confirmed shortly.
Should households wait until the Alternative Fuel Payment is in place before purchasing fuel?
Customers should continue to buy fuel normally to meet their heating needs. There will be no benefit from delaying purchase.
The AFP will be delivered as a fixed credit amount via household electricity bills, meaning customers need take no action to receive it. It will not be applied as a discount or voucher when purchasing fuel.
Customers who are eligible for the AFP but who do not have a relationship with an electricity supplier will receive the £100 AFP via a designated body. Details will be confirmed shortly.
What is the detail behind the calculation that led to the £100 Alternative Fuel Payment and will it be kept under review?
The aim of the £100 Alternative Fuel Payment (AFP) is to provide people who do not use mains gas to heat their homes with the equivalent support to those who do and whose heating costs are helped by the Energy Price Guarantee (EPG).
After accounting for the impact of the EPG, the annual cost of heating a typical household with gas in the UK rose by £761 over the year to October 2022, and from £583 in October 2021 to £1,344 in October 2022. This was an increase of 130%. This increase would have been 220% (or an annual bill for a typical household of £1,875) if it wasn’t for the EPG.
The annual cost of heating a typical household with heating oil rose by £903 in Great Britain (from £615 to £1,518) and £1,080 in Northern Ireland (from £820 to £1,900) from September 2021 to September 2022. This was an increase of 147% in Great Britain and 132% in Northern Ireland.
To bring the percentage cost increase for a typical household using heating oil to heat their home (147%) in line with the percentage cost increase for a typical household using gas to heat their homes (130%) the Government needed to reduce the effective annual bill heating oil bill for a typical household to £1,415 (a 130% increase on an annual bill of £615 at September 2021 levels).
We are aware that some households which do not use mains gas to heat their homes use fuels other than heating oil. We have checked that £100 is sufficient to limit the increase in heating costs for those fuels as well.
Given that the £100 is designed by reference to past increases in the cost of heating oil (in the year to September 2022) we will be monitoring the price of heating oil and other alternative fuels closely in the months ahead to see if further payments are required.
What does ‘constant review’ mean / What is the criteria for reviewing the amount offered under the Alternative Fuel Payment?
We do not currently have set criteria for reviewing the amount offered under AFP. The current level (£100) is designed to compensate for previous increases in the cost of heating oil and other alternative fuels (in the year to September 2022). Therefore we acknowledge the need to keep future increases in the costs of those fuels under review.
How will you determine which households are eligible for Alternative Fuel Payment support and when will they receive the £100?
The Government has committed to providing the £100 payment this winter.
Further details on how the Government will determine the households who will receive this support will be provided shortly. This is because there is no central register in Great Britain or Northern Ireland of people who use alternative fuels to mains gas for their heating.
Therefore we are working at pace with stakeholders to identify the best method of identifying eligible customers and making payments to them in a way which is as easy as possible.
Will the Alternative Fuel Payment cover households who use coal/LPG/biomass/solid fuel?
The AFP will be provided to all customers who use an alternative fuel to mains gas. This includes, for example, LPG, coal, and biomass.
What is the EBRS?
The Energy Bill Relief Scheme in Great Britain: The Energy Bill Relief Scheme will give financial assistance on energy bills for all eligible non-domestic customers, including businesses, charities and public sector organisations.
The scheme will be available to everyone on a non-domestic contract including businesses, voluntary sector organisations like charities, and public sector organisations such as schools, hospitals and care homes who are:
- on existing fixed price contracts that were agreed on or after 1 April 2022
- signing new fixed price contracts
- on deemed/out of contract or variable tariffs
- on flexible purchase or similar contracts
Here, the government will also provide a discount on gas and electricity unit prices. To calculate this discount, the estimated wholesale portion of the unit price you would be paying this winter will be compared to a baseline ‘government supported price’ which is lower than currently expected wholesale prices this winter. For all non-domestic energy users in Great Britain this government supported price has been set at:
- £211 per megawatt hour (MWh) for electricity
- £75 per MWh for gas
A comparable rate will be set shortly for Northern Ireland. For comparison, wholesale costs in England, Scotland and Wales for this winter are currently expected to be around:
- £600 per MWh for electricity
- £180 per MWh for gas The designs of the GB scheme and the separate Northern Ireland scheme will be consistent and offer equivalent support.
For consistency between the domestic and non-domestic schemes, the government supported price is based on the wholesale element of the Energy Price Guarantee for domestic customers.
For fixed contracts the discount will reflect the difference between the government supported price and the relevant wholesale price for the day the contract was agreed. The government will publish the wholesale prices for calculating this for each day from 1 April 2022.
For variable, deemed and all other contracts, the discount will reflect the difference between the government supported price and relevant wholesale price, but subject to a ‘maximum discount’ (£345/MWh for electricity and £91/MWh for gas).
Businesses on variable / flexible contracts will need to choose if they move to fixed contracts, which will likely suit businesses that don’t want to be exposed to price variation.
How will businesses get their reductions?
The support will be automatically applied to all eligible bills. The savings for energy used in October will be seen in October bills, which will usually be received in November.
For businesses on existing fixed price contracts
Businesses that agreed fixed price contracts on or after 1 April 2022 will get support if the calculated wholesale element of the price they are paying is above the government supported price.
If their fixed tariff is based on wholesale prices below the government supported price, then they will not be eligible for support.
For businesses about to sign a new fixed price contract
The relevant price reduction will be automatically applied to bill by suppliers.
For businesses on default or variable tariff contract
Those on variable tariffs who want to remain on them will get the reduction, subject to the ‘maximum discount’.
The maximum discount has been calculated by comparing the government supported price with the average of expected wholesale prices for delivery across the 6 months of the scheme. The maximum discount, set on 30 September 2022, is £345/MWh for electricity and £91/MWh for gas.
If wholesale prices rise above the combined government supported price and maximum discount then prices will increase.
For businesses on a flexible purchase contract
For these users, price reductions will depend on the difference between monthly weighted average baseload prices (determined by individual hedging approaches) and the government supported price. The maximum support available per unit of energy will be limited by the maximum discount.
What about businesses that signed fixed contract before 1 April 2022?
Those who signed fixed rate contracts before 1 April 2022 would not have been exposed to the recent rises in wholesale prices, so will not be eligible for support under the scheme.
When will the scheme be reviewed?
The Government will publish a review of the scheme in 3 months’ time, to inform decisions on future support after March 2023. This will focus on identifying the most vulnerable non-domestic customers.
Will the Energy Bill Relief Scheme (EBRS) apply in Northern Ireland?
There will be a comparable scheme to the Energy Bill Relief Scheme in GB, with support rates and scheme design adjusted to reflect the different wholesale prices and market conditions in NI.
The delivery will diverge slightly from the GB scheme and will require suppliers in Northern Ireland to oblige by such regulations enforced by the Utilities Regulator. Detailed regulations for the scheme will follow.
How will Alternative Fuel Payments (Non-domestic) work?
The Government will also provide support to non-domestic consumers who cannot get support for heating costs through EBRS because they use heating oil or alternative fuels, not gas. This will likely take the form of a flat rate payment. The Government will deliver support via electricity bills in both GB and NI, or provide support through Local Authorities.
How will the scheme work for park home residents?
The Bill includes provisions to require intermediaries, such as landlords, to pass benefits received from the Energy Price Guarantee, Energy Bills Support Scheme, or Energy Bill Relief Scheme as appropriate to end users (including residents of park homes and heat networks) who are the intended beneficiaries of the relevant schemes.
Intermediaries, including those managing parks and heat networks, will be required to provide information to end users on any benefit they have received from the Energy Price Guarantee, Energy Bills Support Scheme, or Energy Bill Relief Scheme, and further detail on how they expect to pass any benefit on to the end user.
The legislation will make clear that intermediaries must pass the benefits to the end-user. The government will introduce regulations to allow end-users to recover any benefits they are due as a debt if they do not receive them by a specified period. This means that end-users will be able to pursue recovery of benefits through civil proceedings.
On the Alternative Fuel Payment, we are working with electricity suppliers across GB and NI to agree a deliverable timeline to make the payment to everybody off-gas grid. We will revert on when this can be paid and we are working urgently to finalise the scope of the scheme and develop delivery options.
How will heat networks be covered?
For heat network consumers we are appointing the Energy Ombudsman to be able to handle consumer complaints about the “pass-through” of the EBRS. Heat networks, like all intermediaries, will be required to pass the discount through to consumers but they will also be required to notify their consumers, within a set time period, about how they intend to do this. If the consumers do not receive a notification or they see no reduction in their bills when they should expect it, then they will be able to appeal to the Energy Ombudsman who will be empowered to take enforcement action (fines) against heat networks.
How does the Energy Bill Relief Scheme work in situations such as when a business also includes a home (e.g. a farm) and has electricity for both, through one meter; would they get the £400 energy bills support?
Whether a mixed business/domestic premises would get EBRS and EBSS comes down to eligibility for the schemes:
For EBSS in GB, premises only get £400 if they are on a domestic electricity contract with their electricity supplier (for NI more information will follow);
It is unlikely that if someone has one electricity meter/account that they can claim to be a business on one scheme (ERBS) and domestic on another (EBSS). If on a domestic contract the account would qualify for EPG and EBSS rather than ERBS and EBSS;
EBSS only applies to the electricity account, so it is possible there could be a business gas account and electricity domestic account at the same address, but this would seem unlikely.
For off-gas grid customers, can the EBSS £400 be paid in a lump-sum rather than monthly, to help with cash flow?
EBSS GB payments have already started, so such customers would have already received a £66 discount in October and are about to receive £66 for November, etc.
One reason why all account types use monthly instalments is in case people move electricity supplier (e.g. because they move house). If some people had received lump-sums and some had not, this would add complexity.
Why community generators are covered by the Cost-Plus Revenue Limit
Government recognises the role that community- and locally-owned renewable energy schemes play. These projects help encourage innovation and investment as well as community engagement with the energy challenge.
Government will shortly be consulting on the Cost-Plus Revenue Limit. The issue of having a minimum threshold for size of generation stations will be considered, as well as whether it is appropriate for this mechanism to apply to community or local energy schemes.