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Daily Mirror
Daily Mirror
Business
Zahra Khaliq

Millions to receive £400 energy discount from next week - how it works explained

Millions of households across the UK are set to receive a £400 energy discount from next week to help them tackle soaring bills.

This is on top of Prime Minister Lizz Truss’ announcement of an Energy Price Guarantee, which will freeze energy bills at around £2,500 a year for someone with typical use from October 1.

The scheme means that Ofgem’s planned October price cap rise, which would’ve seen average yearly energy bills hit £3,549, has been avoided.

Families will start receiving £400 off their energy bills from October in six instalments.

The discount will be taken off the £2,500 figure unveiled by the Prime Minister, reducing the average bill this year to around £2,100.

The £400 flat payment will benefit some more than others (Getty Images/iStockphoto)

A discount of £66 will be applied to energy bills from next week in October and November, going up to £67 each month from December through to March 2023.

Households will get a discount worth £66 in October and November, rising to £67 each month from December through to March 2023.

Direct debit customers will receive the energy bill discount automatically - meaning you don't need to do anything to get the money off.

The cash will be applied either as a deduction to your monthly direct debit, or as a refund to your bank account after your direct debit has been taken.

If you don't pay by direct debit, the discount will be applied as a credit to your energy account each month.

The credit should appear as if you'd made a payment to your energy bill.

Customers who use a smart prepayment will see the energy bill discount credited directly to their smart prepayment metres in the first week of each month of delivery.

Yearly energy costs will vary depending on each household (Getty Images)

Prepayment meter customers will be given discount vouchers or Special Action Messages (SAMs) in the first week of each month, issued via text, email or post.

Customers will need to redeem these at their usual top-up point.

But they will still pay more than someone paying by direct debit.

Direct debit is cheaper for households as it costs less for firms to bill customers for their energy.

Those with a second home could find they benefit from the scheme multiple times, as eligible households will have the discount applied automatically.

Under Truss’ plans, bills are based on unit prices, so the more energy you use, the more you will pay.

While Truss’ price guarantee rate is promised to last for two years until October 2024, the Government has given no commitment to pay the discount next year.

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