The Explanatory Notes to the Energy Prices Bill were ordered to be printed by the House of Lords on 18 October 2022, the same day the Bill was brought from the House of Commons as HL Bill 591. The Commons passed Money and Ways and Means resolutions on 17 October 20221. The notes were prepared by the Department for Business, Energy and Industrial Strategy and state that they do not form part of the Bill and have not been endorsed by Parliament1.
The notes describe the Bill's purpose as addressing "the negative social, economic and other impacts of the current unprecedentedly high energy prices"1. They set out the policy background: the global energy crisis, "compounded by the Russian invasion of Ukraine on 24 February 2022", meant that without intervention the annual energy bill for a typical household was due to rise from £1,971 to £3,549 from 1 October 2022, with a further increase expected in January 2023 to an estimated £4,2001. Forward gas and electricity prices as of 12 September 2022 implied a January 2023 price cap of around £4,2001.
The Energy Price Guarantee, announced in September 2022, applies from 1 October 2022 and keeps the annual energy bill for the typical household to around £2,5001. 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 EPG will apply from 1 October 2022 keeping the annual energy bill for the typical household to around £2,500"
Support for homes not reached through electricity bills is also set out. The domestic Alternative Fuel Payment is a one-off lump sum of £100 delivered through a household's electricity bill, with eligible households who do not receive support that way able to access it through an AFP Discretionary Fund1. Heat network consumers will also receive a £100 support payment; there are 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.
| Measure | Amount | Start |
|---|---|---|
| Energy Price Guarantee, Great Britain | typical household bill around £2,500 a year | 1 October 2022 |
| Energy Price Guarantee, Northern Ireland | same level of support | 1 November 2022 |
| Energy Bills Support Scheme | £400 discount | not stated in the notes |
| Domestic Alternative Fuel Payment | £100 one-off | not stated in the notes |
| Heat network consumer payment | £100 | not stated in the notes |
The notes state that the scheme can run for a maximum of two years after the first date the regulations provide for the reduction of electricity or supply charges1. A review will consider how to support households and businesses with energy bills after April 2023, and the Government intends to publish a review of the scheme in three months looking at how best to offer further support to customers most vulnerable to energy price increases1. 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 Commons agrees more, with quarterly reporting on any such spending1.
Why it matters for households
The notes confirm the unit price households pay for gas and electricity is reduced by Government funding rather than by a change in wholesale costs, so the level of the guarantee depends on decisions taken under the Bill rather than on market prices1. For a home off the gas grid, support arrives as a £100 payment through the electricity bill or, where that route is not available, through a discretionary fund1. For the roughly 480,000 consumers on heat networks, the notes say cost reductions under the Energy Bill Relief Scheme are to be passed on as lower heat bills, and the £100 payment depends on strengthening the database of heat networks and their consumers1. The Bill also requires intermediaries to pass savings from energy price support to end users who pay through a third party1.
What happens next
The notes record that the Energy Price Guarantee runs from 1 October 2022 and the Northern Ireland equivalent from 1 November 20221. A review of the scheme is to be published in three months, considering further support after April 20231. The notes do not give a date for Royal Assent or for the regulations that will set the detail of each scheme; those have not been reported here1.
Sources1 cited
- Energy Prices Bill - Explanatory Notes, bills-api.parliament.uk