Some 28 million households across the UK with a direct domestic electricity contract with their supplier will receive a £400 rebate this winter to help with rising energy bills. The money will be deducted automatically from Direct Debits or smart meters for the next six months, finishing at the end of March 2023.
The first wave of discounts for £66 started in October for most households, however, people living in park homes or those whose energy bills are included in their rental agreement re set to to receive the financial support from the UK Government by the end of the year. People on older-style pre-payment meters are receiving vouchers which they can then top up at any PayPoint.
However, many energy customers may not be aware that when the credit is applied directly to their account, it may be used to clear any arrears they may have or go towards an agreed debt repayment plan.
The information came to light in a written response from Business Minister Graham Stuart MP, after he was asked by Peter Gibson MP “whether energy suppliers are permitted to take funds paid through the Energy Bills Support Scheme to settle domestic energy debts in cases where there is a payment plan in place through the benefits system”.
The Conservative MP is referring to the Fuel Direct Scheme. Earlier this year, the DWP introduced a temporary change to the Fuel Direct scheme in order to protect people claiming benefits from soaring energy bills and is in place until April 1, 2023.
This means that energy suppliers can no longer request new deductions or increased payments from a claimant’s benefit to pay for ongoing fuel consumption.
At the time DWP said: “For claimants who pay for their ongoing fuel usage directly from their benefits, the amount they pay was not automatically increased if their bill went up in April 2022 and will not automatically increase when the price cap changes in October 2022.”
However, while this remains in place and is entirely down to the claimant whether they want to increase the amount being deducted from their benefits for fuel bills, the response from the Business Minister indicates that suppliers can deduct money from the monthly discount to pay towards debt on an account.
Mr Stuart explained: “The objective of the Energy Bills Support Scheme (EBSS) is to help people with the cost of their energy bills over this winter.
“Where credit is applied to an account, it will contribute to arrears and any agreed debt repayment plan. As set out in its consultation response, the 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.
“There are comprehensive rules in place to protect energy customers at risk of being in debt.”
How will I receive the monthly discount?
The £400 discount will be administered by suppliers and paid to customers over six months with payments starting from October 2022 and ending in March 2023.
This discount will be applied as follows:
- October - £66, if you have not received this yet contact your supplier
- November - £66
- December - £67
- January - £67
- February - £67
- March - £67
The discount will be provided on a monthly basis regardless of whether consumers pay monthly, quarterly or have an associated payment card.
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.
PayPoint reported earlier this week that hundreds of thousands of pre-pay vouchers have not been redeemed.
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