An Energy Price Guarantee and Energy Bills Support Scheme for eligible households has been introduced in the Act for households with a domestic electricity connection in England, Scotland and Wales. For households that do not use mains gas or who use alternative fuels, there will be a one-off Alternative Fuel Payment (AFP).
The legislation will also allow the UK Government to provide support for non-domestic consumers who are not able to receive support for their heating costs through the Energy Bill Relief Scheme, as they use heating oil or alternative fuels instead of gas.
Energy Price Guarantee (EPG) = reduction of the unit cost of electricity and gas so that the typical household pays, on average, around £2,500 a year on their energy bill, for the next 2 years, from 1 October 2022 until 30 September 2024.
Energy Bills Support Scheme (EBSS) = £400 non-repayable discount to eligible households to help with their energy bills over winter 2022 to 2023.
- £66 discount in October and November
- £67 discount in December, January, February and March
Energy Bill Relief Scheme = will enable the UK Government to provide financial assistance on energy bills for all eligible non-domestic customers, including businesses, charities and public sector organisations.
Key points for property agents
If energy bills are paid for as part of the rent, there is an obligation on landlords to pass on the benefit to end users (tenants). This is outlined in Clause 19 of the legislation.
The EPG will automatically reduce the cost of electricity and gas for any domestic energy contract. Therefore, the landlord should not charge the tenant above the maximum resale price if they charge based on usage.
- The tenant may recover the amount specified by the landlord if not received by a 'specified time'
- The landlord is obliged to provide information to the tenant to understand and enforce the passing on of the benefits
- The landlord may have to provide information to the Secretary of State for monitoring, audit and keeping the passing on of these benefits under review
If the landlord charges a fixed rate for bills within the rent (all inclusive) they should pass the EPG and EBSS benefits on to the tenant, if provided for in the tenancy agreement. The UK Government's advice is, in these circumstances, landlords who resell energy to their tenants should pass the discounted payments on appropriately, in line with Ofgem rules to protect tenants. Meaning that the landlord should not charge more than the maximum resale price of energy to their tenants:
- landlords are encouraged to come to an agreement with tenants on the discount in line with the arrangement in the tenancy agreement
- the landlord’s fixed charge may already provide tenants with similar protection from the impact of the energy price increase
Pre-payment meters
The EPG discount rate will automatically be applied by the electricity supplier.
Smart pre-payment meters will be credited automatically with the EBSS on the first week of each month from October to March, totalling £400.
Tenants on traditional pre-payment meters will receive redeemable vouchers by text/email/post or an automatic credit when topping up. This is determined by the electricity supplier.
Timetable
The Energy Prices Bill received Royal Assent on 25 October 2022 and is now enacted and called the Energy Prices Act 2022.
