The government's Energy Price Guarantee (EPG), which currently sets consumer energy rates and kicked in on 1October 2022, is supposed to increase by around 20% on 1 April 2023. However, it's strongly anticipated that the government will go back on this price increase. This would keep bills where they are until 1 July.
No matter what happens with the EPG, the £400 energy discount for electricity customers being rolled out in six monthly instalments will end in March 2023, so all energy customers will find themselves paying an additional £67 a month from April.
The EPG freezes unit rates for domestic customers. It's current rates mean that a 'typical' household using an average amount of energy and paying by direct debit would pay £2,500 over a year, or around £208 a month.
It is due to increase on 1 April to £3,000, or £250 a month. But it's likely that this increase will not go ahead. Experts expect a U-turn to be announced when the government reveals its Spring Budget on 15 March.
In theory, these rates would be in place for the 12 months from 1 April 2023. However, it's expected that in July 2023 the Ofgem price cap will drop below the EPG rates. Customers are expected to pay whichever is the lower amount, which means that from July, rates are likely to be dictated by the Ofgem price cap and not the EPG.
Find out how Ofgem determines what counts as a typical household and how that compares to your own energy usage in our guide to how to estimate your energy use.
Those on means-tested benefits have received top-up payments throughout 2022. Support for these groups will continue during 2023 with further cost of living payments over the 12-month period from April.
In this guide, we break down the measures the government is rolling out to help households through the cost of living crisis. Scroll down to find out more about:
- The government's Energy Price Guarantee, which effectively caps energy unit rates for households on variable tariffs or higher fixed tariffs;
- The Energy Bills Support Scheme, which has seen every household in Great Britain receive a £400 discount on their energy bills from October 2022 to March 2023;
- Additional energy payments for vulnerable groups;
- How the money will be paid to you.
For more help with the increasing cost of living, head to our money-saving advice.
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The Energy Price Guarantee: an energy unit rate reduction
The Energy Price Guarantee (EPG) sees the government top up energy bills for all households to account for the enormous rises in wholesale energy prices. It is happening automatically, before you see your energy prices. It means that your energy unit rates are currently lower than they would otherwise be.
For the period from 1 October 2022 until 1 April 2023, the average EPG unit rates are 34p per kWh of electricity and 10.3p per kWh of gas, for those paying by direct debit. If you pay by prepayment they are slightly different.
FromApril 2023, the government planned to increase the EPG at a higher rate for 12 months. A typical household would pay around £3,000 over the year, or £250 a month. However, it's now anticipated that the EPG will stay at £2,500 - though this is yet to be confirmed by the Treasury.
On 27 February, the energy regulator Ofgem announced that its energy price cap would be set at £3,280 from April to June 2023 – down from the current £4,279 as wholesale energy prices have fallen.
It's anticipated that from 1 July 2023 the Ofgem price cap will drop further to rates that are cheaper than the EPG. If this does happen, people on variable tariffs will pay the cheaper price-capped rates, not the EPG.
How is the EPG applied to energy bills?
Regardless of the type of tariff you're on, you don't need to do anything to receive this support – your energy company applies the EPG automatically to your account.
The rates listed below are for 1 October 2022 to 31 March 2023 but are likely to continue to apply from April.
The EPG does not affect standing charges, which stays at the level set by Ofgem's price cap. They are different depending on where you live.The averages for these are currently 46.36p per day for electricity and 28.49p per day for gas if you pay by direct debit, and 51.41p per day for electricity and 37.51p per day for gas if you pay by prepayment.
- If you pay for a variable tariff by direct debit, the amount you pay per kilowatt hour is capped at an average 34p for electricity and 10.3p for gas. The exact amount varies depending on where you live.
- If you are on a fixed tariff with unit rates higher than 34p for electricity and 10.3p for gas, your rates have been reduced down to these levels, so you end up paying the same as someone on the variable tariff.This is up to a maximum unit rate reduction of 31.8p for electricity and 6.4p for gas from January to March 2023, so if you fixed rates higher than 65.8p for electricity and 16.7p for gas, your bills may still be slightly higher than those on variable tariffs. In this situation, you might find you are better off switching back to your provider's variable tariff (though do take into account whether exit fees would apply).
- People with pre-payment meters have also had their unit rates reduced by a maximum of 31.8p per unit of electricity and 6.4p per unit of gas from January to March 2023. Average rates for prepayment are 33p per kilowatt hour for electricity and 10.82p per kilowatt hour for gas.
- Customers in Northern Ireland are receiving equivalent support with bills set at around £1,950 a year for the typical household. This has been applied from November 2022, backdated to your October energy use.
- Customers who are not connected to the mains gas grid, for example those who heat their homes with heating oil, are receiving a £200 one-off payment, which started to be paid in February 2023.
The Energy Bills Support Scheme: one-off £400 energy discount for all households
As well as the EPG, the Energy Bills Support Scheme (EBSS), originally announced in February 2022, has been rolling out since October 2022 as planned.
This has been giving all households with an electricity tariff a £400 discount on their bills over winter. This has been paid as a credit onto your electricity bill in instalments from October 2022 to March 2023, and it won't need to be paid back.
Energy customers in Northern Ireland are also getting the same discount through the Northern Ireland Energy Bills Support Scheme plus £200 from the Alternative Fuel Payment scheme, regardless of how they heat their home.
If you live in a park home or houseboat, or are otherwise off the mains electricity grid, you are also receiving equivalent support of £400 for energy bills.
Read more on: How to claim your Alternative Fuel Payment money if you are off the traditional energy grid.
How is your £400 energy discount being paid?
The EBSS is being paid in instalments, with £66 paid in October and November 2022, and £67 in December 2022, and January, February and March 2023.
- If you pay for electricity by direct debit the money is either being automatically credited to your energy account (ie. a reduction in your monthly direct debit amount), or returned to your bank account each month following your direct debit payment. If you feel your direct debit payments are too high, you can let your energy provider know and ask for them to be reduced.
- If you pay by standard credit or payment card, your discount is being automatically applied as a credit to your account in the first week of each month. The credit appears as it would if you had made a payment.
- If you have a smart prepayment meter, the money is being credited directly to your smart prepayment meter in the first week of each month.
- If you have a traditional prepayment meter, you’re getting the discount in the first week of each month automatically in one of the following ways: as redeemable vouchers, sent by SMS text, email or post, or as an automatic credit when you top up at your usual top-up point. Your electricity supplier would have let you know in advance how you would be getting your discount as long as they had your up-to-date contact details.
- If you do not have a relationship with an energy provideryou'll need to claim for your alternative fuel payment via an online government portal on gov.uk.Find out how to claim here.
Read more about cutting down your energy usage, with our guide to10 ways to save on your energy bills.
Additional cost of living payments for vulnerable groups in 2023
As well as the £400 EBSS discount, targeted support for pensioners, those on low incomes and those with disabilities was also made available in 2022.
In a budget announced in November 2022, Chancellor Jeremy Hunt confirmed that people eligible for this support will receive further cost of living payments from April 2023.
£900 for those receiving means-tested benefits in 2023
The lowest income households in the UK will each receive a £900 cost of living payment in 2023, the government has announced.
To be eligible, you must be receiving certain means-tested benefits. This includes Universal Credit, tax credits, pension credit and other means-tested benefits.
The money will be paid directly into people’s accounts from the Department for Work and Pensions (DWP) or HMRC in three payments over the year starting in spring 2023. The second will be during autumn 2023 and the third will be during spring 2024.
In 2022, people in eligible groups were paid £650 of additional top-up support, separated into two payments in July and November. The first payment of £326 started being paid to the qualifying 8m UK households from 14 July. The second payment of £324 followed in November.
£150 for those receiving non-means-tested disability benefits in 2023
People who receive non-means-tested disability benefits were given an extra one-off cost-of-living payment of £150 in September or October 2022. This group will receive another £150 disability payment during summer 2023.
Any disabled people who also get means-tested benefits can receive both the £900 payment above and this £150, bringing your total additional payment in 2023/24 to £1,050.
Up to £300 for pensioners receiving Winter Fuel Payment
Pensioners who currently receive the government’s Winter Fuel Payment – set up to help cover the costs of energy bills during the colder months – were given an extra one-off sum of £150 or £300 from November 2022. This group will receive another £150 or £300 during winter 2023/24.
To be eligible for the Winter Fuel Payment, you must be born on or before 26 September 1956. Payments are between £100 to £300, depending on your age and circumstances.
Those on lower incomes who claim pension credit will also receive the £900 as part of the means-tested benefits package above.
Read more:Find out what help is available if you're struggling to pay your energy bill.
When will I get my means-tested cost of living payment?
People will start receiving the first part of the government’s £900 cost of living grant, which will be £301, during spring 2023, with the second payment of £300 during autumn 2023 and the third payment of £299 during spring 2024. Exact dates haven't been confirmed yet.
The first thing to check is whether you are eligible. For each payment you must have been entitled, or later found to be entitled, to at least one of the following benefits during a specific qualifying period. These are yet to be announced:
- Universal Credit
- Working tax credit
- Pension credit
- Child tax credit
- Income-based jobseeker’s allowance
- Income-related employment and support allowance
- Income support.
If your circumstances are more complex, you may have to wait longer for your payments – for example, if you applied for benefits within the qualifying time period but your application has yet to be approved by the DWP.
Another reason for a longer wait might be if you've changed your bank details but haven't informed the DWP. In this case, the payment may be sent to the wrong account and therefore rejected.
If this happens, the DWP should follow up with you. However, if you’re unsure, get in touch with the DWP directly and provide the correct details to prevent further delay.
If you only receive tax credits, HMRC will let you know about payment and eligibility dates for each cost of living payment and will pay you shortly after the DWP makes its payments to others that are eligible.
You don’t need to apply for the payments, and they should be automatically paid into the same bank account that you receive your tax credits into. Look out for the words ‘HMRC COLS’ on your bank statement or in your online banking app.
Everyone in each category who is eligible for the money should get it around the same date but the time that it lands in your bank account is dependent on your bank. Money added to your bank account may be available sometime after midnight on the day it is due, usually in the early hours. However, some banks deposit money into your account the afternoon or evening before so you can withdraw it before midnight on the day it is due.
Why have I not received my 2022 cost of living payments?
If you still haven't received any of your 2022 cost of living payments and receive means-tested benefits, contact HMRC to find out when you can expect it. You can report missing cost of living payments to HMRC online.
How you'll get your cost of living payments
Energy discount payments
In England, Scotland and Wales, the £400 energy discount is being paid in six instalments. Households saw £66 knocked off their energy bills in October and November, and £67 a month from December to March 2023.
For most people, the discount has been applied to your energy account automatically without you having to do anything to receive it.
The exception is in those with 'non-smart' traditional prepayment meters. They have received either 'Special Action Messages' or vouchers from their supplier in the first week of each month, via text or email, or in the post. The voucher is redeemable at top-up points, such as a local Post Office, and the discount is credited to the meter key. It's therefore important your supplier has your current, up-to-date contact details.
This has raised concerns, as these kind of meters are often used by the poorest and most vulnerable households, and being paid the discount in this way could leave them more exposed to fraudsters.
Please be aware that you will neverbe asked for personal information such as bank details to receive this payment, as you get a voucher to use where you normally top up your meter.
Cost of living payments
Steps are being taken to ensure that vulnerable groups that are more likely to pay bills by cash and cheque, and who may not have already registered their bank details, are identified and don't miss out on the government's cost of living support.
The Confirmation of Payee service – a banking security measure that helps to make sure payments aren't sent to the wrong bank or building society account – is working with payment system provider PayPoint to ensure these customers are given alternative ways to access the funding, and are not excluded.
Do landlords have to pass on the energy bill cost of living payments?
Landlords are legally obliged to pass on the EBSS discount to their tenants 'in a just and reasonable way'.
If you are a tenant paying an energy supplier directly for your electricity, you should have received the £400 electricity bills discount in monthly instalments via your energy supplier. If you pay by direct debit, standard credit or smart prepayment, the payments should have been made automatically, whereas traditional prepayment customers have received the payments via vouchers to redeem at a top-up point.
If you pay for your electricity as part of your rent and your landlord has a domestic electricity contract with an electricity supplier, your landlord has to pass the discount on to you. Your landlord may be reselling the electricity to you based on your usage, in which case they must comply with the maximum resale price rules, which state they must not make a profit, according to government guidance.
Your landlord may be charging an ‘all-inclusive’ rent, where a fixed cost for energy usage is included in your rental charges. If this is the case, landlords are encouraged to come to an agreement with you on the discount in line with the arrangement in your tenancy agreement.
In addition, if you're living in a house in multiple occupation (HMO) and the landlord charges a bundled per calendar month rate (e.g. including rent, energy bills and broadband) you'll be paying a flat rate on the energy costs per month.
If your landlord makes monthly payments directly to a licensed energy supplier on your behalf and has increased their monthly charge to reflect the high energy costs they are paying, providing the landlord does not also use any of the energy supplied, they should pass on the full value of the EBSS as well as the Energy Price Guarantee to you.
Watch out for scammers
Note that scammers have been using the cost of living crisis as a means of duping people into making payments and/or handing over their bank details, so make sure any communication you receive purporting to be from from DWP, your energy supplier or any other organisation is legitimate.
The government will not ask for your bank details, so watch out for any communication that suggests otherwise.
Our story on cost of living scams to watch out for can help you spot the fraudsters.
Other cost of living help
Extension of the Household Support Fund in England
In order to help those who may 'fall through the cracks' – for example, people on housing benefit who are not claiming any other benefits – the government extended the Household Support Fund, delivered by local authorities, by £500m from October 2022 to 31 March 2023.
A further £842m is being provided to extend it by another 12 months until 31 March 2024.
The Household Support Fund is a measure that provides households in England with payments to help with essentials such as food, utilities and clothing. It was first introduced in September 2021 and was due to run until 31 March 2022 before it was extended.
State pension triple lock returns
In addition to the one-off payments, the state pension triple lock is being reinstated for 2023-24; it was temporarily changed to a 'double lock' for 2022 due to high inflation.
This means each year state pension payments increase by either wage growth, CPI inflation in the previous September or 2.5% – whichever is highest.
In November 2022, the government announced that the state pension will increase by September 2022's CPI inflation rate of 10.1% from April 2023, which means that the new state pension will be worth more than £10,000 for the first time.
Benefit payments will also increase by September's CPI inflation, providing an uplift for claimants from April.
- Find out more:what is the state pension?
This article was first published on 26 May 2022 and has been regularly updated since then. It was last updated on 6 March 2023.