Energy Price Guarantee.
On 8 September 2022, the government announced changes to how energy bills will be charged to help reduce the impact of the proposed October price cap. The then Prime Minister, Liz Truss, said that average bills will be held at £2,500, under the Energy Price Guarantee (EPG), for the next two years.
On 17 October 2022 the new Chancellor, Jeremy Hunt, reduced the length of the EPG scheme saying that it would run until April 2023 and not the originally proposed 'two years'. On 17 November the Chancellor said that the EPG would be extended from 1 April 2023 for a further 12 months but the level would be raised to an average of £3,000.
On 15 March 2023 the government announced that the EPG will remain at £2,500 for a further three months.
The government's Energy Price Guarantee limits the amount you can be charged per unit of electricity or gas. So although your total bill will still be determined by how much energy you use, your prices won't rise by as much as previously expected under the price cap.
To limit the amount customers' bills go up by, the government has compensated energy firms for the difference between the wholesale price for electricity and gas they pay and the amount they can charge customers.
From October 2022 - June 2023, the government supplemented what customers paid for energy which meant that instead of the typical household dual-fuel bill potentially rising inline with Ofgem's price cap (£3,549 - 1 October to 31 December 2022, £4,279 - 1 January to 31 March 2023 and £3,280 - 1 April to 30 June) a typical household saw an average annual bill of £2,500 until 30 June 2023. However, with Ofgem’s July price cap (£2,074 announced 25 May 2023) dropping below the government’s EPG (£2,500) from 1 July, it effectively ended the government’s financial support for residential energy customers. Since 1 July 2023 customer’s prices have been determined by Ofgem’s price cap.
The government’s Energy Price Guarantee was designed to keep typical bills for someone paying by Direct Debit to about £2,500 a year until 30 June 2023.
You will still pay for the electricity and gas you use. The government's Energy Price Guarantee was designed to limit the price that we can charge for each unit of energy. However, if you use more electricity or gas, you will pay more. The scheme will not cap your bill, your bill amount will still be based on how much energy you use.
With Ofgem’s July price cap dropping below the EPG, the price cap now determines your energy prices
What this means for customers
From 1 July 2023 all unit prices will be determined by the price cap set by Ofgem.
Standard variable tariff (SVT) customers
Customers on a standard variable tariff (SVT) will see their unit prices drop to be in line with those set by Ofgem from 1 July 2023.
The specific unit rates each customer sees will vary by region and payment type. This is to reflect the different costs to suppliers of providing energy to homes and servicing the different payment methods. The regional variations for electricity, and payment type variations, have been adjusted by Ofgem in the most recent price cap calculations (25 May 2023).
We will adjust standard variable tariffs automatically. Customers on standard variable tariffs do not need to take any action to get the benefits of the price drop set out by Ofgem’s price cap.
Fixed tariff customers
The government has introduced a floor unit price because some people will have fixed at much lower prices some time ago, meaning their annual payments will already be below the £2,500 average set by the government’s Energy Price Guarantee (EPG).
Unit price reductions of up to 17p/kWh for electricity and 4.2p/kWh for gas (1 October to 31 December 2022), 31.8/kWh for electricity and 6.4p/kWh for gas (1 January to 31 March 2023) and 16.6p/kWh for electricity and 2.2p/kWh for gas (1 April to 30 June 2023) will apply to fixed tariff customers to bring their unit prices down to, but not below, the floor unit price. Customers on fixed rate tariffs that are already below the floor unit prices will continue to enjoy those low prices, but won't receive a further discount for the duration of their fixed term.
A small number of fixed price customers may not be brought down to the floor but they can switch to SVT which may benefit them more. We will write to these affected customers. The floor unit prices vary by region and payment type but for electricity the average is at 34p/kWh and for gas the average is at 10.3p/kWh for Direct Debit customers in Great Britain with typical energy consumption. These floor prices remain unchanged from 1 October 2022 through to 30 June 2023.
For a typical variable dual fuel customer paying by Direct Debit, average standing charges will remain in line with the levels set by Ofgem for the default tariff cap from 1 October 2022, at 46p per day for electricity and 28p per day for gas and will remain set at this rate until 31 March 2023. The government says that between 1 April and 30 June 2023 average standing charges for customers on default tariffs will remain capped in line with the levels set by Ofgem in their price cap, at 50.4p per day for electricity and 27.7p per day for gas, excluding VAT, for a typical dual fuel customer paying by Direct Debit.
For a typical variable dual fuel customer paying on receipt of bill (cash/cheque), average standing charges will remain in line with the levels set by Ofgem for the default tariff cap from 1 April 2023, at 56.7p per day for electricity and 32.7p per day for gas and will remain set at this rate until 30 June 2023.
The Energy Bills Support Scheme.
The Energy Bills Support Scheme (EBSS) ended 31 March 2023. Therefore, from 1 April 2023 you will no longer receive the £66 or £67 a month from the government towards your energy bills. Due to this reduction in government support, most households will experience a rise in their energy bills from 1 April. If you are a traditional prepayment customer, please be aware that all EBSS vouchers must be redeemed by 30 June 2023.
In May 2022 the government announced several support measures to help households with rising energy bills. The main measure, announced by the Chancellor, was £400 off electricity bills for domestic customers across England, Wales and Scotland. Known as the Energy Bills Support Scheme (EBSS) this money started to be credited to customers accounts from 1 October 2022 in six, monthly instalments. This money does not need to be paid back.
Each energy supplier was asked to pay customers who have an electricity supply, so this means if your electricity was with us, you'll have got your payment from Sainsbury's Energy. If you only had your gas with us, then you'll have got your rebate through your electricity supplier.
You'll see a discount of £66 was applied to your energy bills in October and November, and £67 a month from December to March 2023.
We paid the money differently, depending on how you pay for your fuel:
- Fixed Direct Debit customers received the money automatically as a deduction to their monthly Direct Debit
- Pay on receipt of bill customers and regular cash payment customers saw the money automatically applied as a credit to their energy accounts in the first week of each month. This will have shown as a credit in the payments section of their monthly bill.
- Smart prepayment customers saw the money credited directly to their meters as a top up in the first week of each month.
- Traditional prepayment customers were provided with vouchers in the first week of each month. You'll need to redeem these at your usual top-up point in a similar way to the Warm Home Discount before 30 June 2023.
The government has published more information about the Energy Bills Support Scheme on their website.
Additional government support.
The government confirmed (21 September 2022) that the £400 Energy Bill Support Scheme (EBSS) will be extended to cover people such as park home or house boat residents, people who use alternative fuel and those tenants whose landlords pay for their energy via a commercial contract.
EBSS Alternative Funding.
People in England, Scotland and Wales without a direct relationship to a domestic energy supplier, including many care home residents and those living in park homes, will receive a £400 discount on their fuel bills through the Energy Bills Support Scheme Alternative Funding (EBSS Alternative Funding).
Online applications will open January for households in England, Scotland and Wales who are eligible for the £400 EBSS Alternative Funding to submit their details, alongside a helpline for those without online access. Payments to households that meet the eligibility criteria – including people who get their energy through a commercial contract or who are off-grid – will be made by local authorities in Great Britain. This is likely to include:
- care home residents
- residents of park homes
- tenants in certain private and social rented homes
- homes supplied via private wires
- residents of caravans and houseboats on registered sites
- farmers living in domestic farmhouses
- off-grid households
To make the process as simple as possible for consumers, those who are eligible for the EBSS Alternative Funding will need to submit a short online form via the government’s GOV.UK pages, with the application portal due to open in January 2023.
Alternative Fuel Payment.
The government is also providing a further £200 Alternative Fuel Payment (AFP) to help those households in Great Britain who use alternative fuels such as biomass or heating oil to meet energy costs this winter. Most households eligible for the AFP support in Great Britain, will receive payment automatically via their electricity supplier in February 2023, with no need to take any action. Those households who will need to apply for the AFP, for example because they do not have a relationship with an electricity supplier, will be able to do so in February, through the same GOV.UK portal as the one that will be used to apply for support under the EBSS Alternative Funding scheme.
Energy bills support for households in Northern Ireland.
All households in Northern Ireland will receive a single, one-off £600 payment to help with their bills. Payments will start in January 2023. This will be made up of £400 of support under the government’ Energy Bills Support Scheme Northern Ireland (EBSS NI), and £200 of support under the Alternative Fuel Payment (AFP) scheme, which will go to all households in Northern Ireland irrespective of how they heat their home.
All households in Northern Ireland will receive the support in a single payment to ensure the full benefit of the scheme is felt as soon as possible. The Northern Ireland scheme differs in this respect from EBSS in Great Britain to account for the particular nature of the NI energy market.
Administered by energy suppliers, customers who pay by Direct Debit will receive the £600 into their bank account directly. Other customers will be sent a voucher to redeem the payment, with further details of how they will work and what ID will be required to be set out shortly.
What other help is available?
- A £150 non-repayable Council Tax Rebate payment for all households that are liable for Council Tax in Bands A-D in England.
- A £650 payment will be made to more than eight million low-income households who receive Universal Credit, tax credits, pension credit and other means-tested benefits. The first payment of £326 started appearing in people's bank accounts from 14 July. To be eligible for the first instalment, people must have started a successful benefits claim by 25 May.
- £144 million of discretionary funding for Local Authorities to support households who need support but are not eligible for the Council Tax Rebate. Further details to be announced.
- The government is continuing with plans to expand eligibility for the Warm Home Discount and increase the rebate value to £150 each year (from £140). More detail will be published shortly in the government response to the consultation on this.
- The Winter Fuel Payment provides between £250 and £600 help to pay heating bills for customers born before 25 September 1956.
Talk to Customer Service Team if you are having difficulty
Our customer service team are here to help if you are concerned about the impact of the price cap on your energy bills. Please visit our help page to find out more about how we can support you.