Help with heating and energy costs for heat network customers

The UK government has introduced various schemes to help domestic energy customers (i.e. householders) through the recent energy price crisis. There are also existing support schemes for certain customers e.g. those on benefits or receiving a pension, to help them with energy payments. Here we describe the key support schemes and how they apply to heat network customers.

Critically, heating and hot water provided via a heat network is not subject to the Ofgem price cap mechanism nor is it subject to the government's Energy Price Guarantee (EPG) that has provided a subsidy to domestic electricity and gas bills.  Instead support has been provided in the form of energy price subsidies to heat network operators, who have been required to pass on the benefit to customers.

Government support schemes

General government information on energy cost support is available here and more general information on cost of living help is available on a separate government ‘Help for Households’ website here.

Below we look at the energy cost support schemes and how they apply to those on heat networks.

Energy Bill Relief Scheme (EBRS) - heat and hot water bills

This scheme provided energy bill relief for non-domestic customers (including heat networks) in Great Britain between 1 October 2022 and 31 March 2023.

The scheme reduced the price paid for energy by non-domestic customers (such as heat network operators), and legislation made it mandatory for heat network operators to pass on the benefit of these reduced prices to their customers and to notify their customers of how they did this. For more information on the pass-through requirement, see government guidance. Customers that believe their heat supplier failed to properly pass on the benefit of this scheme can complain to their heat supplier and the government has provided a template letter for doing so. If they are still not satisfied with their supplier’s response, then they can complain to the Energy Ombudsman, who can provide independent redress.

The impact of the scheme on end user prices will vary depending on the gas contract supply arrangements and the overall efficiency of the heat network.

This scheme also applied to electricity prices for those on communal electricity/private wire schemes.

Heat Networks Energy Bills Discount Scheme (EBDS) - heat and hot water bills

The Government announced that from 1st April 2023 a new, and significantly improved, heat network support scheme will be available to heat networks that will ensure that (in most cases) operators won't have to pay above 7.83p/kWh for gas and 34p/kWh for electricity. The government says that this scheme is estimated to be worth up to £380 million in total, £860 for the average heat network customer.

Operators have 90 days to register with a government online portal (from 26th April) in order to receive the discounted rate. This should see most heat network tariffs fall significantly, although we estimate that many will still be paying around 50% higher unit rates for heat than domestic gas customers. Like the previous EBRS, operators will have to notify customers of the discount and how they are applying it to heat bills.  Customers will also be able to complain to the Energy Ombudsman if they believe their operator fails to do this. 

Also see  Energy Bills Discount Scheme heat network supplier guidance - GOV.UK (www.gov.uk)

Energy Price Guarantee (EPG) - domestic electricity bills

The Energy Price Guarantee has reduced the unit cost of domestic electricity and gas since 1 October 2022.  It was due to end on 31 March 2023, but was extended until 30th June 2023. The average unit price for dual fuel customers on standard variable tariffs, subject to Ofgem’s price cap, paying by direct debit is limited to 34.0p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, under the scheme. It is expected that Ofgem's price cap will bring prices below this level from 1st July 2023.

Most heat network customers will benefit from the EPG in relation to their electricity bills (unless they are on a communal electricity/private wire supply). However heat networks buy their gas as non-domestic or commercial customers, so (like the Ofgem price cap) this scheme does not apply to heat network prices for heating and hot water.

Energy Bills Support Scheme (EBSS)

The Energy Bills Support Scheme provided a £400 discount to eligible households to help with their energy bills over winter 2022 to 2023. This was paid automatically via reduced domestic electricity bills in October 2022 to March 2023.

Since February 2023, households on a communal electricity supply (or 'private wire' scheme) have been able to recieve the £400 Energy Bills Support Scheme payment via an Alternative Fund. Online applications for households in England, Scotland and Wales who are eligible for the £400 EBSS Alternative Funding can be made (until 31st May 2023) here. Payments to households that meet the eligibility criteria – including people who get their energy through a commercial contract or who are off-grid – will be made by local authorities in Great Britain.

Means-tested support

Cost of Living Payment

This is an extra payment to help with the cost of living if you’re entitled to certain benefits (including the state pension) or tax credits. If you’re eligible, you’ll be paid automatically in the same way you usually get your benefit or tax credits. This includes if you’re found to be eligible for a Cost of Living Payment or a Disability Cost of Living Payment at a later date.

You could get up to 3 different types of payment depending on your circumstances on a particular date or during a particular period:

• Cost of Living Payment, if you get a qualifying low income benefit or tax credits
• Disability Cost of Living Payment, if you get a qualifying disability benefit
• Pensioner Cost of Living Payment, if you’re entitled to a Winter Fuel Payment

These payments are not taxable and will not affect the benefits or tax credits you get.

Warm Home Discount Scheme - opens October 2023

Eligible customers could get £150 off their electricity bill for the winter under the Warm Home Discount Scheme.

To qualify for this scheme you need to be either in receipt of the Guarantee Credit element of Pension Credit, or on a low income and have high energy costs (or in Scotland meet your energy supplier’s criteria for the scheme).

Cold Weather Payment

This is paid to those in receipt of certain benefits (such as Pension Credit, Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, and Universal Credit) during periods of very cold weather. You’ll get £25 for each 7-day period of very cold weather between 1 November and 31 March.

This is paid automatically to those eligible, but it is important to make sure that you notify Jobcentre Plus if you have a baby or child under 5 living with you and are in receipt of benefits, as you might not otherwise get paid this automatically.