The Department for Business, Energy and Industrial Strategy (BEIS) has published full details on how it plans to deliver the £400 Energy Bills Support Scheme to some 29 million households across Scotland, England and Wales. The UK Government has said it is ‘urgently’ working to ensure people in Northern Ireland also receive the equivalent of this support as soon as possible.
The £11.7 billion scheme is part of the £37 billion cost of living assistance package aimed at helping households through this winter. However, that support came in response to predictions that energy bills would rise to £2,800 for the average household in October, but since then the forecasts have become even bleaker.
Consultancy BFY believes bills could hit £3,420 per year from October, before rising to £3,850 at the start of next year, which would see the average household hit with a bill for over £500 for January alone.
If the predictions come to pass they will put enormous pressure on already squeezed households. It would be a near-doubling of today’s record price cap which at £1,971 is already hundreds of pounds more than the previous high.
Below is everything you need to know about the £400 discount including how it works for those paying by direct debit, card payments or prepayment meters, people living in park homes, those paying energy bills included in their rent, people living off the grid and those living on houseboats.
It’s important to be aware nobody needs to apply for the £400 discount - energy suppliers will deliver this support to households with a domestic electricity connection over six months from October.
If someone contacts you asking for bank details to process the payment it is a scam, the BEIS confirmed that “households will never be asked for their bank details, and those with a domestic electricity connection will not need to apply.”
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 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.”
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.
Will I get the discount if I live in a park home, houseboat or am an energy consumer living off the grid?
Approximately one per cent of UK households are currently ineligible to receive Energy Bills discount as they do not have a domestic electricity meter and a direct relationship with an electricity supplier.
The UK Government has confirmed that “further funding will be available to provide equivalent support of £400 for energy bills for the 1% of households who will not be reached through the Energy Bills discount”.
An announcement with details on how and when these households across the country can access this support will be made this Autumn.
What happens if I switch energy suppliers or my household circumstances change?
Electricity suppliers will apply the discount to bills from October 2022. This will be done by meter points, so it won’t matter if you switch supplier.
The Scheme will now provide six monthly payments based on six qualifying dates rather than a single date in October. This allows new eligible households to benefit from the relevant portion of the total £400 as there will be multiple qualifying dates.
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.
Why are people with second homes getting more than one payment?
BEIS said: “We want to ensure households start to receive this support from October and taking action on second homes could risk the start date for delivering the Scheme as a whole for winter, which would have an impact on many more households including the most vulnerable.
“We acknowledge that delivering support at this scale and pace means there may be instances where people receive the discount multiple times if they are paying multiple electricity bills, however, any delay would further disadvantage consumers experiencing high energy bills, particularly those in lower income households who are most in need of the payment.
“Removing the discount from those with multiple meters could also stop people who are paying on behalf of elderly or disabled individuals from receiving a needed discount.”
Why isn’t this support targeted to vulnerable households who need it most?
Households most in need will be eligible for further support in addition to the Energy Bills discount.
This includes:
- £650 one-off Cost of Living Payment for around 8 million households on means-tested benefits
- One-off £300 Pensioner Cost of Living Payment for over 8 million pensioner households to be paid alongside the Winter Fuel Payment in November/December
- One-off £150 payment for around 6 million people across the UK who receive certain disability benefits
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