The new Energy Price Guarantee (EPG) for households across the UK comes into force this weekend and will see customers on the standard tariff with typical usage pay on average £2,500 a year for their energy bill until 2024.
While this new UK Government measure effectively replaces Ofgem’s price cap, it does not mean £2,500 is the maximum someone could pay for their energy bills over the next 12 months. From October 1, the scheme will limit the price suppliers can charge customers for units of gas and electricity, but in real terms, if you use more energy, you will pay more and if you use less, you will pay less.
The new EPG is expected to save the average household £1,000 a year based on current energy prices. It also comes in addition to the £400 energy bills discount for all households and together, they will bring costs close to where the energy price cap currently stands at £1,971.
Who is eligible for the Energy Bills Support Scheme?
All households with a domestic electricity connection in Great Britain are eligible for the £400 discount. There is no need to contact energy suppliers as it will be paid automatically.
How will I receive the discount?
The £400 discount will be administered by suppliers and paid to customers over six months with payments starting from October 2022.
This discount will be applied as follows:
- October - £66
- November - £66
- December - £67
- January - £67
- February - £67
- March - £67
The Department for Business, Energy & Industrial Strategy (BEIS) said that the discount will be provided on a monthly basis regardless of whether consumers pay monthly, quarterly or have an associated payment card.
If you do not receive the first instalment by the end of October, you should contact your energy supplier.
How each monthly payment will be made
Breakdown of the delivery process for each payment method:
- Direct debit customers - will receive the discount automatically as a reduction to the monthly direct debit amount collected, or as a refund to their bank account following direct debit collection during each month of delivery
- Standard credit customers and payment card customers - will see the discount automatically applied as a credit to standard credit customers’ accounts in the first week of each month of delivery, with the credit appearing as it would if the customer had made a payment
- Smart prepayment meter customers - will see the discount credited directly to their smart prepayment meters in the first week of each month of delivery
- Traditional prepayment meter customers - 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. Customers will need to take action to redeem these at their usual top-up point
How payments work for those on a traditional prepayment meter (non-smart meter)
As outlined above, traditional prepayment meter customers will get redeemable vouchers in the first week of each month, issued via SMS text, email or post. Customers will need to take the voucher code to their usual top-up point where it will be applied to their payment card or meter key.
It is essential that traditional prepayment customers ensure their supplier has the most up-to-date contact details for them on file to ensure they get their voucher and understand how to redeem it.
The UK Government said it will “work with suppliers and third parties on targeted communications and messaging for prepayment meter customers to ensure vouchers are used”.
Direct debit customers - what to look out for
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 direct debit collection during each month of delivery.
BEIS said: “More supplier guidance on this will be published ahead of October’s launch.”
Support for people without a direct electricity connection
The UK Government has also said that the £400 discount to households starting from October will also be available to the 1% of households who would not otherwise have received this support.
Additional funding will be made available so that £400 payments will be extended to include people such as park home residents and those tenants whose landlords pay for their energy via a commercial contract.
The UK Government said it is committed to ensuring such households receive the same support for their energy bills and will introduce legislation to make sure landlords pass the EBSS discount on to tenants who pay all-inclusive bills.
The Uk Government will also provide an additional payment of £100 to households across the UK who are not able to receive support for their heating costs through the Energy Price Guarantee.
This might be because they live in an area of the UK that is not served by the gas grid and is to compensate for the rising costs of alternative fuels such as heating oil.
Energy bills included in rent - how do I make sure my landlord passes on the reduction?
The guidance on GOV.UK states: “Landlords who have a domestic electricity contract with a licensed electricity supplier and then resell the electricity to their tenants based on energy usage must comply with the maximum resale price rules.”
The maximum resale price for electricity is currently set as the same price as that paid by the person reselling it. Under these circumstances, the Uk Government expects landlords to pass on the discount received to each tenant.
Landlords with a domestic electricity connection who charge ‘all inclusive’ rent, such as the case for many student houses, where a fixed cost for energy costs are included in their rental charges, should also be passing on the discounted payments to tenants.
What if my energy supplier goes bust?
If a supplier is not able to provide the discount to all its eligible customers, the supplier must report to BEIS and Ofgem what steps it is taking to ensure delivery.
What if I change my payment method or tariff?
Eligible customers will receive their discount on a monthly basis regardless of their supplier, payment method or tariff.
How will it work for customers in arrears or in debt?
All households with a domestic electricity connection are eligible for the £400 discount.
The UK Government expects and encourages suppliers to make it their priority to work actively to move customers with large arrears balances onto repayment plans wherever possible - this is already a licence condition for suppliers.
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