In the Spring Budget, the Chancellor announced a number of measures to support consumers with the increased cost of energy. These measures are outlined below, along with our asks to ensure that heat network customers receive equivalent support to other domestic customers, and to provide long term support for vulnerable customers when the existing measures come to an end in April 2024.
The Chancellor announced in the Spring Budget that through the Energy Bills Discount Scheme (EBDS) the government will provide heat network customers with a with a higher rate of relief that will ensure they do not face disproportionately higher bills when compared to customers in equivalent households who are supported by the Energy Price Guarantee (EPG).
The target rate for Heat Network Energy Bills Discount Scheme will be 7.83p/kwh for gas, with separate rates for electricity. This is estimated to be worth up to £380 million in total, £860 for the average heat network customer.
Eligible heat network suppliers (including housing associations) with domestic customers will be required by law to apply for a specific higher Energy Bills Discount Scheme rate through a digital application portal which will open at the end of April. Once the portal opens, they will have 90 days to register all their heat networks. Heat networks will need to be registered regardless of if they are district or communal, metered or unmetered, or whether your gas prices are below the Energy Bills Discount Scheme level or not. Successful applications will result in an eligibility certificate for qualifying heat networks being issued to both the heat supplier and the energy supplier. The discount will be automatically applied by your gas/electricity supplier.
Heat suppliers will be obliged by law to pass this discount to customers in a just and reasonable way in the same way they have been doing for the Energy Bill Relief Scheme pass-through requirements.
Information that will be required when you register your heat network(s):
The function to bulk upload heat networks will not be immediately available (which means you have to do them one by one), but this function is expected to be introduced at a later date.
DESNZ will be issuing a call for evidence on domestic customers on non-domestic meters to further inform the development of options to support these customers where they are facing lower levels of support than other domestic customers. The call for evidence is due to be issued before the summer and the NHF would welcome any feedback from members on the price increases their residents on heat networks are facing.
The Energy Price Guarantee (EPG), which limits the price households pay per unit of gas and electricity, has been in place since October 2022. The Energy Price Guarantee was set to increase from its current £2,500 per year level to £3,000 per year in April 2023. In the Budget, the government announced that the Energy Price Guarantee will now remain at £2,500 for a further three months until July 2023.
Almost 41% of social renters in housing association homes use prepayment meters for their electricity use. This amounts to 978,000 households in total. Prepayment meters are more expensive overall than having a direct debit or payment on receipt of a bill, due to daily standing charges and slightly higher capped rates, an issue that has been hugely exacerbated by the war in Ukraine and the rising costs of energy. Alongside the cost of living crisis, this means that housing association residents on these meters are especially vulnerable to the impacts of these higher costs and may end up unable to afford any energy at all.
In the Spring Budget, the Chancellor announced that the government will adjust the Energy Price Guarantee from July to bring charges for comparable direct debit in prepayment meter customers into line until April 2024. When the Energy Price Guarantee ends in April 2024, the government will ensure the prepayment meter premium is ended on a permanent basis, meaning that these customers will no longer pay more for their energy than other domestic customers.
We welcome the additional support announced in the Spring Budget to help domestic customers with their energy bills, including the extension of the Energy Price Guarantee at its current rate and the commitment to bring costs for prepayment meter customers in line with other domestic customers.
We also welcome the support announced for heat network customers, which will help to ensure these customers do not face disproportionately higher energy bills under the Energy Bill Discount Scheme than consumers under the Energy Price Guarantee. However, there is still a risk that many heat network customers will end up paying up to 50% more for heat than domestic gas customers. We are keen to continue to work with the government to ensure that heat network customers receive the same protection as those on domestic gas supplies.
We are calling on the government to introduce a social tariff to protect vulnerable energy consumers from volatile prices from April 2024 onwards. Targeted support for those who need it most, including people on means tested benefits, disability benefits, and Carer’s Allowance, alongside those still struggling with their bills but missing out on support from the welfare system, would help to address fuel poverty and would address disparities between payment types.