The Department for Business, Energy and Industrial Strategy published Explanatory Notes for the Energy Prices Bill on 18 October 2022, the same day the Bill was brought from the House of Commons as HL Bill 591. The Notes state that the Bill's purpose is "to address the negative social, economic and other impacts of the current unprecedentedly high energy prices"1. The House of Commons passed Money and Ways and Means resolutions on 17 October 2022, and the House of Lords ordered the Bill to be printed on 18 October 20221.
The Notes set out the schemes the Bill is intended to deliver. The Energy Price Guarantee applies from 1 October 2022 and keeps the annual energy bill for a typical household to around £2,500, after the Government announced it in September 20221. Without intervention, the Notes say, the annual bill for a typical household was due to rise from £1,971 to £3,549 from 1 October 2022, with forward gas and electricity prices as of 12 September 2022 implying a further increase in the price cap in January 2023 to around £4,2001. A similar scheme will provide the same level of support to households in Northern Ireland from 1 November 20221.
The Energy Bills Support Scheme provides a £400 discount for all households in Great Britain, delivered through domestic electricity suppliers, and the Bill enables it to be extended to Northern Ireland1. The Notes describe the Northern Ireland scheme as primarily delivered through a Direction by the Secretary of State to energy licence holders, with licence conditions modified to require compliance1.
The Bill also covers non-domestic customers and alternative fuels. The Energy Bill Relief Scheme provides a discount on electricity and gas bills for eligible non-domestic customers, including businesses, charities and the public sector such as schools and hospitals1. The domestic Alternative Fuel Payment is a one-off lump sum of £100 delivered through a household's electricity bill, with an AFP Discretionary Fund for eligible households who do not receive support that way1. Heat network consumers will also receive a £100 payment; the Notes record over 14,000 heat networks in the UK, providing heating and hot water to approximately 480,000 consumers1. The Non-Domestic Alternative Fuel Payment will likely take the form of a flat rate payment1.
"The EPG will apply from 1 October 2022 keeping the annual energy bill for the typical household to around £2,500"
The Notes also describe powers relating to generators and intermediaries. Clause 16 places a temporary requirement on electricity generators to make payments where revenue for generated electricity is above a specified level, for lowering the cost of electricity for consumers or meeting the Secretary of State's expenditure in reducing such costs1. Clause 19 requires intermediaries to pass through savings from energy price support to end users who pay their energy bill through a third party1. Spending by the Secretary of State under Clause 13(2) is subject to a financial cap of £100 million for each individual project unless the House of Commons agrees more, with quarterly reporting on any such spending1.
Why it matters for households
The Notes confirm the shape of the support that sits behind household bills this winter: a unit rate reduction under the Energy Price Guarantee, a £400 discount through electricity suppliers, and £100 for households that use alternative fuels or are on heat networks1. For a household's energy independence, the practical effect is that a larger share of the cost of the units a home uses is met by government funding rather than by the household, for as long as the schemes run. The Notes also set out that the schemes are time limited: the Energy Price Guarantee scheme can run for a maximum of two years after the first date the regulations provide for the reduction of electricity or supply charges1.
What happens next
A review of the scheme will be undertaken to consider how to support households and businesses with energy bills after April 20231. The Government intends to publish a review of the scheme in three months, which will consider how best to offer further support to customers most vulnerable to energy price increases1. The Notes do not set out further dates beyond those.
Sources1 cited
- Energy Prices Bill - Explanatory Notes, bills-api.parliament.uk