Trystan Casey
The UK government has implemented several schemes to support households and businesses with their energy bills. These include the Energy Price Guarantee, which limits the price per unit of gas and electricity, and the Energy Bills Support Scheme, which provides a discount on electricity bills. The government has also introduced cost-of-living payments for people on means-tested benefits and extra payments for pensioners and people with disabilities. In addition, the government offers grants and benefits to help with energy bills, such as the Warm Home Discount and Cold Weather Payment. While the government does not pay for electricity directly, these initiatives help to reduce the financial burden of energy costs on individuals and businesses.
| Characteristics | Values |
|---|---|
| Government support for energy bills | Limits the price households pay per unit of gas and electricity |
| Energy Price Guarantee | Limits the price households pay per unit of gas and electricity, reducing household energy bills over the next two years |
| Typical household energy bill | £2,500 per year |
| Energy Bill Support Scheme | £400 discount on electricity bills in 6 instalments between October 2022 and March 2023 |
| Typical household energy bill without support | £3,500 per year |
| Ofgem price cap | £1,834 per year until 1 January 2024, then £1,928 per year |
| Cost of Living Payments | Three payments of £301, £150, and £300 for people on means-tested benefits, pensioners, and people with disabilities |
| Lowest income households support | £900 payment in 2023 and early 2024 for households on Universal Credit, tax credits, pension credit, and other means-tested benefits |
| Disability benefit recipients | £150 payment during summer 2023 |
| Household Support Fund | Support for vulnerable people or those who cannot afford essentials, including energy bills |
| Cold Weather Payment | Payment for each 7-day period of consecutive below-freezing temperatures for eligible households |
| Energy-saving improvements | Grants available for insulation, boilers, and heating improvements |
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What You'll Learn
Energy Price Guarantee
The Energy Price Guarantee (EPG) was a scheme introduced by the UK government to limit the price per unit of electricity and gas paid by households, charities, and public sector organisations. The scheme was announced by then-Prime Minister Liz Truss in October 2022, in response to the 'energy crisis' and was expected to last for two years.
The EPG set maximum prices for gas and electricity that were below the existing price cap. The government compensated energy suppliers for selling energy at below-cap prices. The scheme was designed to reduce the impact of price increases for domestic customers, with a typical household saving around £1,000 per year on their energy bills. The EPG also applied to businesses, which paid wholesale energy costs well below half of the expected prices for the winter of 2022.
The Energy Price Guarantee scheme ended in March 2024, as the Ofgem price cap fell below the EPG level. From July 2023, households without a pre-payment meter no longer received an EPG discount on their energy bills. Additionally, from July 2023, households in Northern Ireland no longer received the EPG discount due to falling wholesale energy prices.
While the EPG has ended, the UK government continues to provide support to vulnerable customers through schemes such as the Household Support Fund, the Warm Home Discount scheme, and the Fuel Direct Scheme.
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Cost of Living Payments
The UK government has implemented several initiatives to assist households and businesses with their electricity bills, including:
The Energy Price Guarantee
The Energy Price Guarantee was introduced in October 2022 to limit the price per unit of electricity and gas for households, businesses, charities, and public sector organisations. This scheme is expected to run for two years and will save a typical family £1,000 per year on their energy bills.
The Energy Bill Support Scheme
As part of the Energy Bill Support Scheme, every household that paid a domestic electricity bill received a £400 credit towards their energy costs. This discount was applied in six monthly instalments from October 2022 to March 2023.
The UK government is providing three Cost of Living Payments to individuals on means-tested benefits, as well as additional payments for pensioners and people with disabilities. These payments are made directly into bank accounts and do not require a separate application. The first payment of £301 was made between April and May 2023, followed by a £150 Disability Payment between June and July 2023, and a second Cost of Living Payment of £300 will be issued between October and November 2023.
The lowest-income households in the UK, receiving means-tested benefits such as Universal Credit, tax credits, or pension credit, are eligible for a £900 cost of living payment spread out over 2023 and early 2024. The first payment was made in spring 2023, the second will be issued in autumn 2023, and the third will follow in spring 2024.
Winter Fuel Payment
The Winter Fuel Payment is an annual tax-free payment of £200 or £300 to assist households, especially older people, with heating costs during winter. From 2024 onwards, eligibility for this payment will require having reached State Pension age and receiving qualifying benefits or tax credits.
Cold Weather Payment
The Cold Weather Payment is a one-off payment to help with extra heating costs during the coldest months, from November to March. It is automatically paid when the average temperature in an area drops below zero degrees Celsius for seven consecutive days. Eligibility for this payment depends on receiving certain benefits.
Warm Home Discount
The Warm Home Discount Scheme offers credit on electricity bills for individuals receiving qualifying benefits or those on low incomes.
In addition to these initiatives, local councils may provide further assistance through schemes like the Household Support Fund, which helps vulnerable individuals or those struggling to afford essentials, including energy bills. It is recommended to check with your local council or seek advice from organisations like Citizens Advice to explore all the available support options.
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Energy Bills Support Scheme
The Energy Bills Support Scheme (EBSS) was a UK government initiative that provided a £400 discount on electricity bills for every household. The discount was applied automatically in six monthly instalments between October 2022 and March 2023. The scheme was designed to shield households from massive bill increases and curb inflation.
The EBSS was a necessary intervention that formed the largest single component of the government's Growth Plan. It aimed to protect jobs and livelihoods by reducing the cost of energy for households. The scheme was expected to curb inflation by 5 percentage points, boost economic growth, control the rising cost of goods, and reduce the cost of servicing the national debt.
In addition to the EBSS, the government also introduced the Energy Price Guarantee, which limited the price per unit of gas and electricity for households, businesses, charities, and public sector organisations. This measure was also expected to reduce energy bills and curb inflation.
To further support vulnerable households, the government offered the Household Support Fund, which provided assistance to those who could not afford essential costs, including energy bills. Local councils administered these schemes, with eligibility criteria varying across different areas.
Other schemes included the Great British Insulation Scheme, the Warm Homes: Local Grant, Cold Weather Payments, and the Winter Heating Payment. These initiatives provided additional support to households, particularly those with low incomes or receiving specific benefits.
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Energy Bill Relief Scheme
The Energy Bill Relief Scheme (EBRS) was introduced to provide businesses with protection from rising energy costs over the winter of 2022/23. The scheme was in effect from 1 October 2022 to 31 March 2023 and applied to non-domestic energy users, including businesses, public sector organisations, and charities. The EBRS provided a discount on gas and electricity unit rates for eligible non-domestic customers, with the final per-unit price reflecting network charges, operating costs, and competition between suppliers.
The EBRS was established under the Energy Prices Act 2022, which granted the government powers to ensure that scheme benefits were passed on to consumers. The act also provided for a compliance and enforcement regime. The scheme was not subject to a price cap review, unlike the Ofgem price cap for domestic markets. The Ofgem price cap limits how much energy suppliers can charge per unit, providing a maximum rate for customers on variable tariffs.
The EBRS discount was automatically applied to non-domestic energy bills, and customers did not need to apply for it. The discount was based on the difference between the Reference Wholesale Price (reflecting the winter commodity price when the customer locked into their contract) and the government-supported price. For electricity, the Supported Wholesale Price was £211 per megawatt-hour (MWh), and for gas, it was £75 per MWh.
The UK government announced on 9 January 2023 that the EBRS would be replaced by the Energy Bills Discount Scheme due to the costs of maintaining the former and the decline in wholesale gas prices. The Energy Bills Discount Scheme ran from 1 April 2023 to 31 March 2024, providing eligible non-domestic customers with a discount on their per-unit energy costs, subject to a maximum discount and a wholesale price threshold.
In addition to the EBRS, the UK government has implemented other measures to support households and businesses with energy bills. These include the Energy Price Guarantee, which limits the price households pay per unit of gas and electricity, and the Energy Bill Support Scheme, which provided a £400 credit to households. There are also cost-of-living payments for eligible individuals, such as those on means-tested benefits or with disabilities.
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Grants and benefits
The UK government has introduced several grants and benefits to help households manage their energy bills. These include:
- The Energy Price Guarantee: This scheme limits the price per unit of gas and electricity, resulting in lower energy bills for households. It is expected to save a typical family around £1,000 per year on their energy bills.
- The Energy Bills Support Scheme: This scheme provides a £400 discount on electricity bills for households, administered by energy suppliers in six monthly instalments from October 2022 to March 2023.
- Cost of Living Payments: These are being sent out across 2023-24 for people on means-tested benefits, including Universal Credit, tax credits, and pension credit. The lowest-income households in the UK will receive a total of £900 in three payments over this period.
- Cold Weather Payments: Eligible individuals will receive a payment for each 7-day period where the average temperature in their area drops below 0°C.
- Warm Home Discount: This discount of £150 is available for those receiving certain benefits, such as the Guarantee Credit element of Pension Credit. It is also offered to those with high energy costs, determined by the type of property rather than usage.
- Local Council Support: Local councils offer various schemes to help vulnerable individuals or those struggling to afford energy bills. This includes fuel vouchers and funding distributed through local charities and community groups.
- Grants for Energy Efficiency: The government and energy companies provide grants to support energy efficiency improvements in homes, such as insulation, new boilers, or heating improvements. These grants can help reduce energy consumption and lower bills.
- Rebates for Oxygen Concentrators: Individuals who require an oxygen concentrator due to a disability or health condition can receive a rebate for the electricity it consumes.
It is important to note that these schemes have specific eligibility criteria and application processes, and individuals should refer to official government sources for the most up-to-date information. Additionally, the government is taking steps to boost British energy supply and increase independence to curb inflation and prevent future energy price surges.
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Frequently asked questions
No, the government does not pay for your electricity. However, they have introduced the Energy Price Guarantee to limit the price households pay per unit of electricity and gas they use.
The Energy Price Guarantee is a scheme introduced by the government to limit the price households pay per unit of electricity and gas they use. It is expected to save a typical household around £1,000 per year on their energy bills.
All households in Great Britain qualify for the Energy Price Guarantee and will see their energy bills limited for the next two years. Households in Northern Ireland will also receive the same support through the Energy Price Guarantee from November 2022, with support for October bills backdated.
Yes, there are several other schemes and payments available to help with energy bills. These include the Household Support Fund, Cold Weather Payments, and the Warm Home Discount. There are also grants and schemes run by local councils to help with energy efficiency improvements and fuel vouchers.
Eligibility for these schemes and payments varies. For example, the Cold Weather Payment is for those who already receive certain benefits, while the Warm Home Discount is for those with high energy costs or who receive certain benefits. The Household Support Fund is for those who are vulnerable or cannot afford essentials, and eligibility is determined by local councils.
