What is the Energy Price Guarantee?
How the Energy Price Guarantee will affect you.
Since 1 July 2023 customer’s prices have been determined by Ofgem’s price cap.
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 2022 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.
On 15 March 2023 the government announced that the EPG will remain at £2,500 for a further three months.
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.
From October 2022 - June 2023, the government supplemented what customers paid for energy which meant 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, £4,279 - 1 January to 31 March 2023 and £3,280 - 1 April to 30 June) a typical household saw an average annual bill of £2,500 until 30 June 2023. However, with Ofgem’s July price cap (£2,074 announced 25 May 2023) dropping below the government’s EPG (£2,500) from 1 July, it effectively ended the government’s financial support for residential energy customers. Since 1 July 2023 customer’s prices have been determined by Ofgem’s price cap.
The government’s Energy Price Guarantee was designed to keep typical bills for someone paying by Direct Debit to about £2,500 a year until 30 June 2023. The scheme continues until March 2024 but the threshold increased to £3,000 from 1 July 2023.
You will still pay for the electricity and gas you use. The government's Energy Price Guarantee was designed to 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. With Ofgem’s July price cap dropping below the EPG from 1 July, the price cap now determines your energy prices.
The government's Energy Bills Support Scheme (£400) support ended on 31 March 2023. More information on this can be found on our EBSS webpage.
What this means for customers.
From 1 July 2023 all unit prices and standing charges will be determined by the price cap set by Ofgem. The Energy Price Guarantee information below relates to the period between 1 October 2022 and 30 June 2023.
Prepayment meter customers.
For prepayment meter customers, Ofgem's price cap 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 fall in line with the price cap from 1 July 2023.
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 July 2023. For E7 customers there will be a slight day unit price increase but a night unit price decrease.
On 15 March 2023 the Chancellor announced in the Spring Budget that people using prepayment meters will receive additional support from 1 July 2023 to bring their bills in line with people who pay by Direct Debit. This means that from 1 July a typical customer on a prepayment meter will pay the same amount as an equivalent customer paying by Direct Debit until 31 March 2024.
This will be delivered through the Energy Price Guarantee by providing a unit rate discount. The discount incorporates the differences between prepayment meter and Direct Debit costs in both unit rates and standing charges.
From 1 July to 30 September 2023, the Energy Price Guarantee prepayment meter discount will be applied to gas unit rates only, as the combined unit rate and standing charge for electricity prepayment meters will already be less than the equivalent for Direct Debit. The gas unit rate discount will therefore be (excluding VAT):
0.249p/kWh for gas from July to September 2023. The specific prepayment meter unit rate each customer sees will vary by region. See the full list for July-September 2023.
The discount will be reviewed every 3 months in line with future changes to Ofgem’s price cap.
The discount will be applied automatically to the price that is set on the meter. You do not need to contact your supplier to apply or use vouchers.
Standard variable tariff (SVT) customers.
Customers on a standard variable tariff (SVT) will see their unit prices drop to be in line with those set by Ofgem's price cap.
We will adjust standard variable tariffs automatically. Customers on standard variable tariffs do not need to take any action to get the benefits of the price drop set out by Ofgem’s price cap.
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), 31.8/kWh for electricity and 6.4p/kWh for gas (1 January to 31 March 2023) and 16.6p/kWh for electricity and 2.2p/kWh for gas (1 April to 30 June 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.
A small number of fixed price customers may not be brought down to the floor but they can switch to SVT which may benefit them more. We will write to these affected customers.
The floor unit prices vary by region and payment type but for electricity the average is at 34p/kWh and for gas the average is at 10.3p/kWh for Direct Debit customers in Great Britain with typical energy consumption. These floor prices remain unchanged from 1 October 2022 through to 30 June 2023.
The government says that between 1 April and 30 June 2023 average standing charges for customers on default tariffs will remain capped in line with the levels set by Ofgem in their price cap, at 50.4p per day for electricity and 27.7p per day for gas, excluding VAT, for a typical dual fuel customer paying by Direct Debit.
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 April 2023, at 56.7p per day for electricity and 32.7p per day for gas and will remain set at this rate until 30 June 2023.
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 changed from 1 April 2023 and became 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 government's £400 discount is part of the Energy Bills Support Scheme which ended on 31 March 2023.
What other measures are there?
A £900 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. This is an increase from £650 for the last year. The first payment of £301 will be made in the spring, £300 in the autumn and a final £299 in the spring of 2024.
6 million households with disabilities will receive a £150 cost of living payment in the summer (same as 2022).
8 million pensioner households will receive £300 (same as 2022) during the winter of 2023-24.
The £400 discount off energy bills (EBSS), which was paid in monthly instalments over the winter, won’t be continued.
The above measures announced by the government are for the tax year 2023-24 were announced in the Autumn Statement (17 November 2022). These took effect on 5 April 2023.
In the Autumn Statement on 22 November 2023 the Chancellor announced that benefits will increase from April 2024 by 6.7%, the inflation rate for September 2023. This applies to working-age benefits such as means-tested benefits such as Universal Credit, and disability benefits.
What support is available for E.ON Next customers?
This is a worrying time for everyone as the cost of living remains high. We understand that you may be struggling to pay and have a number of resources to help.
E.ON Next Energy Fund.
The E.ON Next Energy Fund has been created to help our customers who are experiencing financial hardship.
There are two ways this fund can help and support you:
To help with paying your energy bill arrears through grants.
To replace appliances such as a cooker, fridge, fridge-freezer or washing machine if yours is broken or in poor condition.
The Priority Services Register (PSR)
The Priority Services Register can offer something extra making sure additional help is in place for customers who need it most, and when difficult situations arise.
We offer a range of special services for people who are of a pensionable age, have a disability or are chronically sick, blind or deaf.
Government support schemes.
Help paying your bills with Paylink.
We’ve partnered with Paylink, a company who specialise in helping customers to understand and take control of their finances. Follow the link to set up an account and then follow the step-by-step process to create your personal budget. Paylink will let us know when you’ve created your budget and we’ll use this information to help and support you with an affordable payment plan tailored to your needs. We’ll also be able to let you know if you’re eligible for other financial support.
Please use this link to set up an online account and complete your budget form today - the sooner you can provide us with this information, the sooner we can help.
Health and wellbeing resources.
If you are also worried about how money can have an impact on your mental health, we advise you to talk to our charity partner Mind.
Your Energy Price Guarantee FAQs.
How will the Energy Price Guarantee be applied to energy bills?
You don't need to apply, and there’s no need to contact us.
For customers in England, Scotland and Wales who pay their energy bill monthly, the Energy Price Guarantee will be applied when your bill is calculated.
Because of the different energy system in Northern Ireland, and the different ways the global energy market impacts different fuel types, the Energy Price Guarantee will work differently for some consumers. The government is working with Northern Ireland partners including the NI Utility Regulator and NI energy suppliers to ensure that an equitable level of support can be delivered to consumers in Northern Ireland.
Do I still get the £400 from the Energy Bills Support Scheme?
Yes. The £400 discount is part of the Energy Bills Support Scheme and will still be available to everyone with a domestic electricity supply. You can get more information on the Energy Bills Support Scheme and how it will be paid to you. The EBSS will end on 31 March 2023.
What happens when my fixed tariff ends?
During the period of the EPG scheme, if your fixed rate tariff ends you will automatically be moved to the price per unit rate set out by the Energy Price Guarantee (EPG).
I pay for electricity as part of my rent, how am I affected?
The Energy Price Guarantee will be applied to rented accommodation and households with a domestic electricity contract and domestic supply.
If your landlord is reselling the electricity to you they must comply with the maximum resale price rules and not make a profit. The maximum resale price for electricity is currently set at the same price as that paid by the person reselling it (see Ofgem’s guidance on ensuring customers are being charged no more than they should).
Your landlord may charge an ‘all inclusive’ rent, where a fixed cost for energy usage is included in your rental charges, in which case they are encouraged to come to an agreement with you on the Energy Price Guarantee in line with the arrangement in your tenancy agreement.
Does the EPG apply to my business/SME?
A six-month scheme for businesses and other non-domestic energy users will offer the equivalent EPG support. This scheme is called the Energy Bill Relief Scheme (EBRS) and will ensure that energy prices for non-domestic energy customers such as businesses, SME, charities and public sector organisations are cut. The EBRS will offer discounts for all firms for six months from 1 October 2022. From 1 April 2023 the government will change the scheme to the Energy Bills Discount Scheme (EBDS).
I’m not connected to the Grid, I live in a park home/on a heat network, how do I get the EPG?
Those households not on standard gas or electricity contracts, such as those living in park homes or on heat networks who are outside the scheme will be no worse off and will receive comparable support through a discretionary fund.
Will second home owners be covered by energy price guarantee?
Second home owners and holiday let investors will be covered by the government’s Energy Price Guarantee.
The government confirmed (8 Sept) average energy bills would be frozen at £2,500 for two years from October. That means homeowners with additional properties and holiday let investors will also benefit from the scheme.