UK Credit

New £200 energy ‘loan’ guide released to help 28million people understand October bill credit

The Department for Business, Energy and Industrial Strategy has released more information about the £200 energy bill ‘loan’ which will be added to more than 28million electricity accounts across the UK United in October.

Ofgem’s energy price cap came into force on April 1, pushing annual consumption on typical standard tariffs up from £693 to £1,971 a year, while homes on prepaid meters will see a increase from £708 to £2,017.

The UK government explains that energy bills are rising because it is more expensive for companies that supply our energy to buy oil, coal and gas – over the last year the price of gas at he alone has quadrupled.

The reasons for soaring gas prices are global – both in global energy demand from a long cold winter last year and in increased demand during the coronavirus pandemic.

In October, £200 will be credited to each electricity account to help offset rising bills. It is not optional and will be repaid over five years from April 2023.

However, a petition calling for consumers to be given the ‘right to refuse’ the £200 energy tax – it’s not a loan – has received over 10,000 signatures of support, meaning it has exceeded the threshold to trigger an official UK Government response.

The UK government will also soon launch a consultation to gather views from all sectors of society on how best to implement this programme.

Below is everything you need to know about the £200 Energy Loan. Full details can be found on the GOV.UK website here.

What is the Energy Bill Assistance Program?

The UK government is providing a package of support worth £9.1billion from 2022 to 2023, which includes the Energy Bill Support Scheme.

Under the scheme, domestic electricity customers in the UK will benefit from a £200 reduction on their electricity costs from October.

The guidelines on GOV.UK state: “It is fair to spread the costs of reduction as widely as possible so that no one is paying more than £40 a year through the levy. Therefore, all domestic electricity consumers will pay a fee in the coming years. »

Will I be eligible for the energy bill assistance program?

All households with a household electricity connection will automatically be eligible for the £200 bill reduction.

Do I need to apply for the £200 aid package?

No. The UK government expects electricity suppliers to automatically apply the reduction to bills from October 2022.

He said: “We are working hard to design the delivery of this and there may be variations in how you actually receive the benefit depending on how you pay for your energy, for example if you pay by direct debit or if you are on a pre-payment counter.

“However, if you have a home electricity meter, you should qualify for the £200 reduction.”

Is the £200 a loan?

No – it’s not a loan, it’s more of a charge against your energy bill.

The British government says: “Reducing the energy bill is not a loan. There will be no interest due, no debt attached and it will not affect your credit rating. It is now a subsidy with a levy on future bill payers.

“The [UK] The government is taking steps to spread the impact of global gas price increases in a way that is more manageable for households.

He goes on to explain that it is a “universal measure to help households smooth out the rising cost of energy bills at a time when they are particularly high”.

He added: ‘Cost cutting will help people cope with rising energy bills now by spreading some of the costs over a few years, so they are more manageable for households.’

New guidelines explain how the £200 energy bill credit will be applied in October

When will more clarity on the design and delivery of the £200 credit be available?

The UK government explained: “We are working on the specifics of delivery and are actively working with energy suppliers, consumer groups and Ofgem to ensure that delivering this reduction and tax is as simple and effective as possible. as possible.”

He added that a consultation will be launched soon to gather opinions from all sectors of society on the best way to implement this program.

Does the program apply to the whole of the UK?

Payment through energy bills will apply across Scotland, England and Wales. Energy policy is decentralized in Northern Ireland.

The Northern Ireland Executive will be funded to provide comparable support with around £150million through the Barnett Formula in the financial year 2022 to 2023.

I’m on a non-smart prepayment meter, will I get the £200?

Yes. Previous schemes used vouchers to match those on prepaid meters and the UK government says it will ensure that households whose energy is managed in this way will benefit from the reduction.

If I live in a park house will I get the £200? Or if I pay for energy in my rent, how do I make sure my landlord passes on the reduction?

The UK government said: ‘We recognize that there are certain situations where a third party will be responsible for (and appointed to) the bill. In these situations, all costs are then passed on to the end user, usually through all-inclusive rent (landlord or tenant) or location fees (eg, park houses).

I don’t need the £200, can I opt out?

No. All households with a household electricity connection will automatically be eligible for the £200 reduction.

The guidelines state: “In accordance with our high-level principles, we want to design a system that is simple to implement while maximizing the reach of the system and ensuring that additional costs are minimized.”

What happens if I change my payment method or tariff, or if my energy supplier goes bankrupt?

“We are still designing the system, but we will ensure that customers who change payment methods or whose energy suppliers fail are not penalized,” explains the guide.

What if I move or change provider?

All suppliers will apply the discount on invoices from October 2022.

The costs will then be recovered from 2023 over five years. The system will be based on electricity meter points, so it doesn’t matter if you change supplier.

Why does the support not fully cover the increased cost of the energy price cap?

This program is expected to help more than 28 million households, spreading the rising costs of global energy prices over time in a way that is more manageable for households.

This £200 energy bill reduction is in addition to a non-refundable £150 council tax rebate for people in Bands A-D, or households in Scotland who currently receive a reduction on their annual bill .

The UK government explained: “This means the majority of households will receive £350 in total, protecting against half of the expected average bill increase.”

The UK government is spending £22billion from 2022 to 2023 to help families with the cost of living.

This includes cutting the Universal Credit taper rate, cutting fuel taxes and raising the National Living Wage, but National Insurance contributions are rising this month, meaning workers across the UK will have less in their take home pay.

Ofgem’s next review will be implemented on October 1 and could see energy bills rise further.

Emma Pinchbeck, chief executive of Energy UK, said the average household could be forced to pay between £2,500 and £3,000 a year for supplies.

However, the forecast is still very early and based on the most recent data, so it is subject to change ahead of the October price cap announcement this summer.

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