What is the Energy Price Guarantee?
How the Energy Price Guarantee will affect you.
On 8 September 2022, the government announced changes to how energy bills will be charged to help reduce the impact of the proposed October price cap. The then Prime Minister, Liz Truss, said that average bills will be held at £2,500, under the Energy Price Guarantee (EPG), for the next two years. On 17 October the new Chancellor, Jeremy Hunt, reduced the length of the EPG scheme saying that it would run until April 2023 and not the originally proposed 'two years'. On 17 November the Chancellor said that the EPG would be extended from 1 April 2023 for a further 12 months but the level would be raised to an average of £3,000.
The government's Energy Price Guarantee limits the amount you can be charged per unit of electricity or gas. So although your total bill will still be determined by how much energy you use, your prices won't rise by as much as previously expected under the price cap.
To limit the amount customers' bills go up by, the government has compensated energy firms for the difference between the wholesale price for electricity and gas they pay and the amount they can charge customers.
The government will supplement what customers pay for energy which means that instead of the typical household dual-fuel bill potentially rising inline with Ofgem's price cap (£3,549 - 1 October to 31 December 2022 and £4,279 - 1 January to 31 March 2023) a typical household will see an average annual bill of £2,500 until 31 March 2023. From 1 April 2023 the government will raise the EPG level to an average bill of £3,000 for a further 12 months.
The government’s Energy Price Guarantee is designed to keep typical bills for someone paying by Direct Debit to about £2,500 a year until 31 March 2023. However the changes to the underlying price cap (announced 28 November 2022) from regulator Ofgem will have an effect on the amount of the EPG discount. This means that most people's bills will change slightly from 1 January 2023 depending on the region they live in and the way that they pay their bills.
You will still pay for the electricity and gas you use. But the government's Energy Price Guarantee will limit the price that we can charge for each unit of energy. However, if you use more electricity or gas, you will pay more. The scheme will not cap your bill, your bill amount will still be based on how much energy you use.
The government says that it will pay for the subsidy, which means that customers will not be expected to repay the support. Customers will continue to receive the government's Energy Bills Support Scheme (£400) support, which runs until 31 March 2023. More information on this can be found on our EBSS webpage.
What this means for customers.
Prepayment meter customers.
For prepayment meter customers, the Energy Price Guarantee (EPG) will be applied to the price you pay for each unit of energy. The unit price varies regionally, by payment method and depends on the time of day that the energy is used but the new unit prices will comply with the government’s EPG from 1 October 2022.
To help our prepayment customers we will not pass on the regional increases to unit prices inline with the price cap announced by Ofgem (28 November 2022). Where there are regional decreases to the unit prices we will pass these on to customers so that they benefit from the reduction. These are due to start from 1 January 2023.
As is the case with the price cap, under the Energy Price Guarantee there will continue to be a small difference between the unit cost for a prepayment meter customer and other bill payers.
Standard variable tariff (SVT) customers.
The government says that the average unit price for dual fuel customers paying by Direct Debit will be 34p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1 October 2022 to 31 March 2023.
These are average unit prices, but the specific unit rates each customer sees will vary by region and payment type. This is to reflect the different costs to suppliers of providing energy to homes and servicing the different payment methods. The regional variations for electricity, and payment type variations, have been adjusted by Ofgem in the most recent price cap calculations (28 November 2022). See the full list of rates by region and payment type:
We will be contacting any customers who may be negatively impacted by Ofgem’s changes to regional variations in the unit rate.
We will adjust standard variable tariffs automatically. Customers on standard variable tariffs do not need to take any action to get the benefits of this Energy Price Guarantee (EPG) scheme.
Fixed tariff customers.
The government has introduced a floor unit price because some people will have fixed at much lower prices some time ago, meaning their annual payments will already be below the £2,500 average set by the government’s Energy Price Guarantee (EPG).
Unit price reductions of up to 17p/kWh for electricity and 4.2p/kWh for gas (1 October to 31 December 2022) and 31.8/kEh for electricity and 6.4p/kWr for gas (1 January to 31 March 2023) will apply to fixed tariff customers to bring their unit prices down to, but not below, the floor unit price. Customers on fixed rate tariffs that are already below the floor unit prices will continue to enjoy those low prices, but won't receive a further discount for the duration of their fixed term.
For the small number of customers who fixed at a high rate exceeding the October Ofgem price cap of £3,549 (£3,674 paying on receipt of bill), they will receive the full discount of 16.998p for electricity and 4.2p for gas (1 October to 31 December 2022). From 1 January 2023 the discount will be 31.8p for electricity and 6.4p for gas (1 January to 31 March 2023) when the price cap rises to £4,279.
We will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme which will remain at the same level as of 1 October 2022. Those fixed customers who are already below the floor will not see a benefit from the EPG.
For a typical variable dual fuel customer paying by Direct Debit, average standing charges will remain in line with the levels set by Ofgem for the default tariff cap from 1 October 2022, at 46p per day for electricity and 28p per day for gas and will remain set at this rate until 31 March 2023.
For a typical variable dual fuel customer paying on receipt of bill (cash/cheque), average standing charges will remain in line with the levels set by Ofgem for the default tariff cap from 1 October 2022, at 52.4p per day for electricity and 33.5p per day for gas and will remain set at this rate until 31 March 2023.
More details on the Energy Price Guarantee.
Businesses and public sector organisations will see equivalent support over the winter.
New plans will tackle the root causes of problems in the energy market by boosting domestic energy supply.
Package will boost growth and curb inflation rises.
Energy Bill Relief Scheme - Businesses and SME.
The government announced (21 September) a new scheme that will see energy prices for non-domestic energy customers such as businesses, SME, charities and public sector organisations cut. The Energy Bill Relief Scheme (EBRS) will offer discounts for all firms for six months from 1 October 2022. This scheme will change from 1 April 2023 and become the Energy Bills Discount Scheme (EBDS).
The government’s Energy Bill Relief Scheme (EBRS) will provide a discount on wholesale gas and electricity prices for all non-domestic customers whose current gas and electricity bills have been significantly inflated in light of global energy prices. This support will be equivalent to the Energy Price Guarantee put in place for households.
The EBRS applies to fixed contracts agreed on or after 1 December 2021 (the government previously announced 1 April 2022), as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period for all non-domestic energy users. The savings will be first seen in October bills, which are typically received in November. Customers do not need to apply for this scheme, we will automatically update their accounts so that eligible customers benefit. The government announced (9 Jan 2023) that the scheme will change from 1 April 2023.
Will I still get the £400 discount?
The £400 discount is part of the Energy Bills Support Scheme and will still be available to everyone with a domestic electricity supply. Customers do not need to apply to the scheme to receive the benefit. We will automatically update customer accounts to reflect the discount.
You can get more information on the Energy Bills Support Scheme as well as how it'll be paid out to you.
What other measures are there?
A £150 non-repayable Council Tax Rebate payment for all households that are liable for Council Tax in Bands A-D in England.
A £650 payment will be made to more than eight million low-income households who receive Universal Credit, tax credits, pension credit and other means-tested benefits. The first payment of £326 will start appearing in people's bank accounts from 14 July. To be eligible for the first instalment, people must have started a successful benefits claim by 25 May. The government said (4 Oct) that the second payment of £324 will arrive in accounts between 8 and 23 November 2022.
£144 million of discretionary funding for Local Authorities to support households who need support but are not eligible for the Council Tax Rebate.
The government is continuing with plans to expand eligibility for the Warm Home Discount and increase the rebate value to £150 each year (from £140).
The Winter Fuel Payment provides between £250 and £600 help to pay heating bills for customers born before 25 September 1956.
The above measures announced by the government are for the tax year 2022-23. Changes announced in the Autumn Statement (17 November 2022) will take affect from 5 April 2023. These pages will be updated to reflect those changes after that date.
What support is available for E.ON Next customers?
This is a worrying time for everyone as the cost of energy continues to go up. We understand that you may be struggling to pay and have a number of resources to help.
E.ON Next Energy Fund.
The Priority Services Register (PSR)
Government support schemes.
External debt-advice resources.
Health and wellbeing resources.
Why are energy prices rising?
Like all energy suppliers, we buy energy from the wholesale energy market to then distribute to you, our customers. Even renewable energy needs to be bought in this way.
The cost of energy in the market has increased significantly in recent times to an unprecedented high. Since this cost makes up a large proportion of your bill, we need to increase the prices on our price plans too.