The government has set out decisive action to support people and businesses with their energy bills and tackle the root causes of the issues in the UK energy market through increased supply – ensuring the country is not left in the same position again.
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Support for households
The government has announced the following immediate, short-term action to support households. For the most part, this will operate in the same way for households across the whole of the UK, but there are a few differences for those in Northern Ireland because of the different way the energy market operates. Where there are differences, the overall support provided will be equivalent across the UK, and the differences in how the schemes will work are explained towards the end of this note in the section ‘How the Energy Price Guarantee (EPG) and Energy Bills Support Scheme will be applied to energy bills in Northern Ireland’.
Energy Bills Support Scheme
The Energy Bills Support Scheme provides a £400 non-repayable discount to eligible households to help with their energy bills over winter 2022 to 2023.
Find out more about the Energy Bills Support Scheme.
A new Energy Price Guarantee
The Energy Price Guarantee will reduce the unit cost of electricity and gas so that a typical household in Great Britain pays, on average, around £2,500 a year on their energy bill, for the next 2 years, from 1 October 2022.
The consumer saving will be based on usage, but on average usage a household will save £1,000 a year (based on current prices from October). Energy suppliers will be fully compensated by the government for the savings delivered to households.
£150 of this £1,000 a year 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.
This is in addition to the £400 Energy Bills Support Scheme, which will be paid, in Great Britain, in 6 monthly instalments from October. Households in Northern Ireland will also receive a £400 discount on bills through the Energy Bills Support Scheme.
The most vulnerable UK households will also continue to receive £1,200 of supportprovided in instalments over the year, through discounts to Council Tax and Cost of Living payments for those in receipt of certain benefits.
Households who are unable to benefit from the full extent of the Energy Bills Support Scheme and/or Energy Price Guarantee scheme (for example, households not on standard gas / electricity contracts) will receive equivalent support. Further detail on this is below.
How the new Energy Price Guarantee will be applied to energy bills in Great Britain
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.
You do not need to apply, and there’s no need to contact your energy supplier.
The discount is automatic. If you get a message telling you that you need to apply, or asking for your bank or credit card details, this could be a scam. You can report messages you think are suspicious.
For consumers in England, Scotland and Wales who pay for their energy through a monthly, quarterly or other regular bill, the Energy Price Guarantee will be applied when your bill is calculated.
In addition: the Energy Bills Support Scheme (£400 discount) will also be applied. In Great Britain, you will automatically receive the Energy Bills Support Scheme as a discount on your monthly or quarterly bill, totalling £400 from October to March. In Northern Ireland we are working to deliver the £400 discount as soon as possible.
If you’re on a standard variable tariff
The average unit price for dual fuel customers 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 unit prices 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.
If you’re 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 EBSSyou 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.
If you’re 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 set by the Energy Price Guarantee.
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.
Standing charges
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.
If you’re not connected to the grid
Those households not on standard gas or electricity contracts, such as those living in park homes or on heat networks – and so outside the scheme – 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.
All domestic households will also receive the £400 Energy Bills Support Scheme. We are working through exactly how different groups of consumers will receive this, using the most practical and tested routes available.
If you use electricity, but don’t use gas for your heating
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.
If you pay for your energy as part of your rent
Your landlord 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.
Your landlord should pass on the discount irrespective of how you pay for your energy use. If they charge you based on your 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 the Energy Price Guarantee and Energy Bills Support Scheme will be applied to energy bills in Northern Ireland
For customers in Northern Ireland, both the Energy Price Guarantee and Energy Bills Support Scheme will work very similarly to those in Great Britain, as described above and householders will receive an equivalent level of support. There will be some ways in which the schemes will operate a little differently, because of the different way the electricity and gas markets operate. The schemes will operate as described in the sections above other than the differences set out in this section.
For the Energy Price Guarantee, the scheme will still work through your electricity and gas bills. There is no need to take any action, and the scheme will provide households in Northern Ireland with equivalent financial support with their electricity and gas bills as for those in Great Britain. Your energy supplier will reduce your bills by a unit price reduction of up to 17p/kWh for electricity and 4.2p/kWh for gas, and you don’t need to take any action to receive this support. This will take effect from November, but we’ll ensure you receive support so you will see the same benefit overall as those households in Great Britain, backdating support for October bills through bills from November.
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.
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.
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.
Support for businesses and non-domestic properties
Providing support to businesses
While the majority of UK non-domestic customers are on fixed price energy deals, some are not. Businesses did not benefit from the Ofgem price cap and there was a risk that some would fall through the gap, unable to fix their energy price and unable to access the kind of support we are making available to households.
A new 6 month scheme for businesses and other non-domestic energy users (including charities and public sector organisations like schools) will be offered support as is being provided for consumers.
After this initial 6 month scheme, the government will provide ongoing focused support for vulnerable industries.
There will be a review in 3 months’ time to consider where this should be targeted to make sure those most in need get support.
Find out more about the Energy Bill Relief Scheme.
Reform to address long-term issues in the UK’s energy sector
Reducing the cost
While the intervention will be funded by the government, action is being taken to significantly reduce the cost over time, including:
Energy Supply Taskforce
A new Energy Supply Taskforce – led by Madelaine McTernan who headed up the UK’s successful Vaccine Taskforce – has begun negotiations with domestic and international suppliers to agree long-term contracts that reduce the price they charge for energy and increase the security of its supply. The government will negotiate with renewable producers to reduce the prices they charge as well.
Energy Markets Financing Scheme
HM Treasury are announcing a joint scheme, working with the Bank of England, to address the extraordinary liquidity requirements faced by energy firms operating in UK wholesale gas and electricity markets. The Energy Markets Financing Scheme will enable stability to both energy and financial markets, and the economy, and reduce the eventual cost for businesses and consumers. The scheme will provide short term financial support and will be designed to be used as a last resort.
Increasing supply
Learning from the mistakes of the past, the government is taking action to accelerate domestic energy supply, increase our energy resilience and achieve our ambition to make the UK an energy exporter by 2040:
- launch a new oil and gas licensing round, expected to lead to over 100 new licences.
- lift the moratorium on UK shale gas production - enabling developers to seek planning permission where there is local support, which could get gas flowing in as soon as 6 months
- drive forward the acceleration of new sources of energy supply from North Sea oil and gas to clean energy like nuclear, wind and solar
- continue progressing up to 24GW of nuclear by 2050, with Great British Nuclear helping to set direction of getting new nuclear projects online in the UK
- undertake fundamental reforms to the structure and regulation of energy marketthrough recommendations from a new review of the UK energy regulation
- launch a review to ensure we are meeting our net zero 2050 target in an economically-efficient way, given the altered economic landscape; chaired by Chris Skidmore MP and reporting by the end of this year, it will ensure delivering the target is not placing undue burdens on businesses or consumers
Other help
Find out what other payments are available that can help with your energy bills.
