Written by: Eelinn Vanquaethem, Marketing & Content Manager

At the end of May, the Government announced a £400 energy discount to help households combat the cost-of-living crisis. This is a welcome offer for most of us who are feeling anxious about our energy bills. However, while energy prices rising is affecting the entire nation, those on heat networks do not currently have the cost of their energy bills capped. There has also been little communication on how heat network residents will see this money reflected on their bills and balance. As a result, we’ve put this short Q&A together to hopefully resolve any uncertainty you may have. 

Contents: 

Why is the cost of my energy increasing?

What is the energy rebate?

How much discount am I eligible for?

How will I receive my rebate if I'm a heat network resident?

How will my energy rebate be issued?

Is there a situation in which I may not receive this rebate?

Why is the cost for my energy increasing?

In the past few months, you may have noticed that either your energy bills have increased or that you have needed to top-up your pay-as-you-go (PAYG) meter more frequently. 

The reason for these soaring prices lies in the current political and economic climate, as well as the UK’s dated energy infrastructures , having only limited ways to generate power. With the world still slowly recovering from COVID, gas prices are currently four times higher than they were a year ago. The UK also relies heavily on Europe for electricity and gas supplies, importing between 35 and 40 per cent of its energy from abroad. Add to this that Russia is currently refusing to increase gas exports to Europe, it’s no wonder that energy prices continue to rise. 

What is the energy rebate?

To help soften the blow, in May, the then Chancellor of the Exchequer, Rishi Sunak, unveiled a £21bn package to help Britons with the cost-of-living crisis, partly funded by a windfall tax on energy companies. 

This plan, also known as the Energy Bills Support Scheme (EBSS), includes a £400 discount on energy bills for all UK households, and a £650 one-off payment to more than eight-million low-income households. 

How much discount am I eligible for? 

The rebate you are eligible for depends on your household’s situation. 

Source: HM Government The majority of households will receive a one-off payment of £400. This amount will be applied to your domestic electricity bill in six instalments over a six-month period starting from October 2022. If you are a PAYG resident, this amount will either be applied to your meter, or you will be issued with a voucher  through the post.

Additional financial support will be provided to the following households:

• Low-income households who receive Universal Credit, tax credits, pension credit and other means-tested benefits will receive a one-off payment of £650 paid in two instalments (one in July and one in the autumn). In total, low-income households are set to receive £1,050.
  • Persons on disability benefits will also receive a £150 payment in September, which may be on top of the £650 payment. In total, persons on disability benefits are set to receive between £550-1,200.
  • Lower income pensioners, who claim pension credit, will receive £300 further to  this £650. In total, lower income pensioners will receive £1,350.
• Households that receive the Winter Fuel payment and have at least one person of pension age will receive an additional £300 in November or December 2022. In total, households that receive the Winter Fuel payment and have at least one person of pension age will receive £700.  

How will I receive my rebate if I’m a heat network resident? 

Most media reports have generalised ‘electricity’ and ‘heating and hot water’ under the same term ‘energy.’ However, in these circumstances it is important to note that these utilities are charged in different ways and through different channels. As such, the government has since clarified that the rebate will be applied to electricity bills and not heating and hot water bills. 

The Department for Business, Energy & Industrial Strategy (BEIS) have confirmed that “the £400 will be routed through the domestic electricity supply contract that each customer has in place”.  

Those on heat networks will thus see the £400 applied to their domestic electricity bills, and not their bills or PAYG meters issued by us. 

How will my energy rebate be issued? 

The way the energy rebate will be issued by your domestic electricity provider depends on the payment method set up: 

• Direct Debit and credit billed customers will have the £400 automatically credited to their account over a six-month period, starting from October 2022. 
• PAYG customers with a ‘smart’ meter will have the amount automatically applied to their meter.
• PAYG customers with a traditional payment meter will be issued with a voucher  through the post.

Source: Department for Business, Energy and Industrial Strategy (BEIS)

Is there a situation in which I may not receive this rebate? 

Until recently, there was some uncertainty as to how and whether residents on communal electricity circuits, or ‘private wire’ networks’ were going to receive the energy rebate, as the payment was only being made available to those on domestic electricity supplies. 

A private wire network is like a heat network but refers to the private supply of electricity to a property, rather than heating and hot water or cooling. 

Fortunately, it has now been confirmed that funding will be available to the one percent of households who would not have been reached through the initial EBSS scheme, and that they will be provided with the equivalent support of £400 for their energy bill. This includes those who do not have a domestic electricity meter or a direct relationship with an electricity supplier, including heat network consumers on a private wire system.

The government will announce details in the autumn of how these households will receive the £400 support.