The Energy Bills Support Scheme will pay £400 to households from October in monthly instalments to help cover the costs of energy bills
Households are to be given hundreds of pounds this winter to help meet the costs of sky-high energy bills.
As a result of the rising energy price cap, which is reacting to the fluctuating wholesale costs of energy, the price we pay for gas and electricity is forecast to swell to more than £3,800 a year for the average home by January.
This is compared to a threshold of just £1,138 for the average home that was in place last summer – meaning that bills are on course to more than triple in just over a year.
But with energy bills likely to soon be running into hundreds of pounds every month, how will the Energy Bills support scheme help and what impact is it likely to have?
What is the Energy Bills Support Scheme?
From October every household in England, Scotland and Wales is to be given a £400 discount on their energy bills to help cover the costs of record-breaking gas and electricity.
Initially announced as a £200 rebate, that would need repaying over a number of years, the government has since rethought the policy in response to continually rising prices and decided to give each home double that amount and let them keep it.
The scheme, say ministers, will help around 29 million households across Great Britain.
Kwasi Kwarteng, the business and energy secretary, explained: “People across the country are understandably worried about the global rise in energy costs, and the pressure this is placing on everyday bills.
"While no government can control global gas prices, we have a responsibility to step in where we can, and this significant £400 discount on energy bills we’re providing will go some way to help millions of families over the colder months."
Do I need to apply?
Adults will not need to apply for the money. Energy suppliers will be responsible for passing on the discount to anyone with a domestic electricity connection.
Everyone with domestic gas and electric supplies will be entitled to the extra £400 and this applies to both those paying by direct debit or those homes using a pre-payment meter.
How will I receive the money?
The £400 discount isn't coming as a lump sum. Instead it will be paid to households over a six month period, starting this October, to try and give everyone steady and gradual financial support over the more-costly winter months.
Customers will see a discount of £66 applied to their energy bills in October and November, rising to £67 each month from December through to March 2023. The money will be sent out on a monthly basis regardless of whether someone pays monthly, quarterly or with an associated payment card.
But with the price of the average bill, for the average sized household, likely to be around £300 by the start of the autumn it's only likely to shave a quarter off the price if that.
Direct Debit customers will receive the discount automatically as a reduction to the monthly direct debit amount collected, or as a refund to the customer’s bank account following the collection of a direct debit.
Standard credit customers and payment card customers will see the discount automatically applied as a credit – with the credit appearing as it would if the customer had made a payment – while smart prepayment meter customers will see the discount credited directly to their meters in the first week of each month of delivery of the money.
Those with traditional prepayment meters will be provided with redeemable vouchers or Special Action Messages (SAMs) in the first week of each month, issued via SMS text, email or post and these can be redeemed at usual top-up points.
There is no need to contact your supplier at all unless you don't receive your first payment by the end of October.
If I pay for energy in my rent do I get the discount?
Landlords who have a domestic electricity contract with a licensed electricity supplier and then resell the electricity to tenants based on energy usage must comply with the maximum resale price rules – which for electricity is currently set as the same price as that paid by the person reselling it. Under these circumstances, says the Government, it expects landlords to pass on the discount.
Those who charge ‘all inclusive’ rent, such as is the case for many student houses, where a fixed price for energy costs is included in rental payments, should also be passing on the discounted payments say ministers.
Do I get the discount if I live in a park home, houseboat or am off grid?
Approximately one per cent of UK households, says the Department for Business, Energy & Industrial Strategy are currently ineligible to receive the £400 energy bill discount because they do not have a domestic meter or a relationship with a supplier.
The Government has promised to explore funding options for these homes to try and provide equivalent support and an announcement is expected in the autumn.
What happens if I switch energy suppliers or my circumstances change?
Electricity suppliers will apply the discount to bills every month from October and so it won't matter if you choose to switch suppliers.
Changing tariffs or payment methods also won't make a difference as six individual monthly payments are being made. So should your circumstances change, you should be eligible to pick up the discount come the next month with a different company if you need to.
What about customers in arrears or in debt?
There has been much talk among charities and poverty campaigners about how much the high energy prices will push people into debt and arrears this year as price cap predictions suggest bills are set to triple from where they were in April 2021 making them unaffordable for millions more people.
The number of people experiencing 'fuel stress' – which is defined as spending at least a tenth of a household's budget solely on energy bills – could rise from five million families to nearer 10 million, warn campaigners and opposition ministers.
As all households are entitled to the £400 in help, it won't prevent you receiving the six payments if you owe money to your supplier already.
The government says it expects - and is encouraging suppliers – to make it their priority as we go towards winter to actively work with customers with large arrears balances. This ordinarily means moving them onto repayment plans to help manage the debt that's being accumulated while ensuring that they have continued access to gas and electricity.
But UK-based charity Christians Against Poverty, which helps churches serve and help their local communities, says it has already handed out double the amount of fuel vouchers for July compared to January while the numbers calling for help is already rapidly increasing.