The UK Government has responded to an online petition asking for energy customers to be given the right to refuse the £200 ‘loan’ which will be credited to around 28 million electricity accounts in October and repaid over five years from April 2023.
The Department for Business, Energy and Industrial Strategy outlined all the support measures Chancellor Rishi Sunak has put in place to help households deal with Ofgem’s 54 per cent price hike, which came into effect on April 1.
Its official response on the petition-parliament website said: “Allowing consumers to opt out of receiving the reduction on their bills would likely increase the administrative costs of the scheme.”
What is the £200 energy bill credit?
The £200 bill credit 'loan' is for all domestic electricity customers including those using a pre-payment meter in Scotland, England and Wales, and will automatically be added to their accounts in October.
They will then repay £40 per year from April 2023 for the next five years.
However, a petition created by Sharron Espin challenged the UK Government’s proposals and has received more than 11,800 signatures of support from people across the country who want the right to refuse it.
But on April 14, the Department for Business, Energy and Industrial Strategy responded to the petition and referred to the £200 bill credit as a “grant” which may cause even more confusion as consumer experts have been trying to help energy customers understand that even though the proposal sounds like a loan, it’s not a loan - more of a levy on their bill.
The Department explained: “To spread the cost of the energy price shock, from October 2022 the government will provide funding to all energy suppliers to pass a £200 reduction on to domestic electricity customers’ bills. This will be recouped through energy bills over five years from 2023.
“The government will not profit from this scheme. The amount recouped by the government over five years from 2023 will be no greater than the sum paid out to consumers from October 2022.
“We would like to emphasize the bill reduction is not a loan, rather, it is a grant which will be delivered to households by their energy supplier to help reduce the burden of energy bills from October. It does not create a liability for any individual. There is no interest due on it, no debt attached to it, and it will not affect recipients’ credit rating. It is a grant now with a levy on future bill payers.”
It continued: “We know that there will be different considerations for consumers depending on their circumstances and the way in which they pay their energy bills. We will continue to work with consumer groups and electricity suppliers to ensure that we deliver the scheme in a convenient way to all eligible customers.”
The policy details of the scheme are still being developed and a public consultation, issued on April 11, will close on May 23, 2022 with the UK Government response expected to be published in the summer.
At 100,000 signatures, the petition will be considered for debate in Parliament - read the full UK Government response here.
The consultation can be viewed here.
To keep up to date with developments in this petition, join our Money Saving Scotland Facebook group here, follow Record Money on Twitter here, or subscribe to our twice weekly newsletter here.
