Suppliers will administer the £400 discount to consumers over six months starting from October.
The government has today provided updated information on how its Energy Bills Support Scheme will work over the coming winter.
First announced initially as a £200 repayable loan, the support was doubled and the requirement to repay it scrapped in May when the then-chancellor Rishi Sunak announced a 25% windfall tax on oil and gas majors.
The £400 discount is one of a number of support measures set up by the government as consumer bills are expected to continue to surge on the back of high wholesale prices, exacerbated by Russia’s invasion of Ukraine.
“People across the country are understandably worried about the global rise in energy costs, and the pressure this is placing on everyday bills,” Business and Energy Secretary Kwasi Kwarteng said.
“While no government can control global gas prices, we have a responsibility to step in where we can and this significant £400 discount on energy bills we’re providing will go some way to help millions of families over the colder months.”
Those with a domestic electricity meter point who pay for their energy via standard credit, payment card and direct debit, will automatically receive a deduction to their bills. Whilst traditional prepayment meter customers will be provided with an Energy Bill discount voucher in the first week of each month, which will be issued via SMS text, email or post, and can be redeemed at their usual top-up point.
Households will see their bills discounted by £66 in October and November, and then £67 for each month from December through to March 2023.
The government has warned consumers to stay alert to potential scams and report these to the relevant authorities where they are suspected. No household should be asked for bank details at any point when accessing the Energy Bills Support Scheme.
“Today we have set out how the government will deliver discounts to help 29 million households with their energy bills this winter,” added Greg Hands, energy minister.
“I encourage families across the country to engage with these plans and particularly those customers on traditional prepayment meters who need to take action. Coupled with world-leading action to radically enhance our home-grown energy security, we will continue to be on the side of British consumers now and into the future.”
Beyond the support scheme for consumers, the government released the Energy Security Bill at the beginning of July, setting out key long-term actions to boost the country’s energy system by developing more domestic renewable and nuclear generation amongst other measures.
This built on measures set out in April within the British Energy Security Strategy, which similarly set out support for generation technologies. Both have been criticised for their lack of energy efficiency support, which is widely seen as a fast way of reducing energy bills for consumers.
In addition to the details on the distribution of the £400 discount, the government has launched a new website setting out how homeowners can heat their homes as part of its wider Help for Households campaign.
“This is a challenging time for many amidst the rising cost of living, which is why the government is stepping in with direct support,” Lord Callanan, energy and business minister said.
“From delivering discounted energy bills throughout the winter months to launching a new website providing homeowners with help to make homes cheaper and warmer, we want to make sure UK residents have the information they need to access all the support that is on offer.”
New analysis from BFY Group suggested that the price cap could hit £3,420 and £3,850 for Q4 22 and Q1 23, respectively. This would mean the average house is facing an energy bill of £500 in January alone.
For more details on how the Energy Bills Support Scheme will be administered, see here.