Here's what's happening with the £400 grant for energy bills
From October 2022 the UK government gave a £400 grant to almost every UK household to reduce the cost of utility bills over winter. Here’s how it worked and how it showed up on your bill as a One Utility Bill customer.
What was the £400 grant?
The UK government gave energy suppliers extra funding to lower the cost of gas and electricity bills. Rising energy costs were having huge knock on effects, especially on the cost of living, making winter a difficult time for many.
The grant was given over the colder months, when people use more energy to stay safe and warm. Applying the discount monthly meant that the most energy-intensive months of the year were a little cheaper.
The grant was passed on to customers by a reduction in each month’s bill between October 2022 through to March 2023. All One Utility Bill customers got this reduction thanks to a huge update to our system. A few customers slipped through the cracks, and we’ve contacted them to let them know. Otherwise this was an automatic reduction for all customers.
The grant was paid for by a windfall tax on companies that generate energy, who made a lot more money thanks to the rising cost of energy.
How did One Utility Bill pass on the £400 grant?
Everybody with a One Utility Bill account got a reduction to their bills, which we’ve labelled in this graphic.
Every supplier split the £400 reduction over six months. One Utility Bill customers got this as £66 reductions for the first two months, and £67 reductions for the next four.
Who got the £400 energy grant?
Almost everybody qualified for the grant. If your house or flat had a domestic electricity connection, you were eligible. This covered basically all homes, and everybody with a One Utility Bill package.
For people who had somebody else managing their bills at the time - like a private landlord, or service like ours - the money got paid to that person or company instead, and the terms of the grant meant that they had to pass it on.
The grant meant a huge update to our system so we could automatically discount all customer bills. If you look at your customer dashboard you'll be able to see how the grant was applied. If something doesn't seem right, check your inbox, we'll have been in touch.
Did I need to claim the £400 grant?
Nope! The direct debit you paid to us should have been updated automatically by our system.
The grant should have been passed on no matter how you paid your bills. Your landlord or bills service received the payment to pass on to you in the same way.
The system was slightly different for people using a prepayment energy meter. The payment was applied as credit to the meter rather than a lower direct debit. People in Northern Ireland also got the payment a little differently because of how gas and electricity are handled there,
Why did the government give the grant?
The energy crisis means energy is reaching prices nobody's ever seen before, and in October ‘22 were due to increase even further.
Wholesale energy costs are linked to the prices you pay for your bills, but because energy suppliers by energy in advance, the costs are often delayed. What energy suppliers pay for energy now is what you’ll pay months later.
This is why there are headlines about energy prices coming down despite energy bills going up.
You can check out a rundown of the energy crisis, and an explanation of why wholesale prices are coming down but bills are going up in our handy blogs.
Basically:
COVID and lockdowns had a big impact on energy supplies, making energy more expensive
Energy suppliers buy their energy in advance to make sure they have enough to meet demand
This means that your energy bills reflect what wholesale prices were months before, not what wholesale energy costs right now
The Russian invasion of Ukraine meant that Europe's gas prices went up. Sanctions meant many countries that relied heavily on gas from Russia had to buy from elsewhere, making gas even more expensive.
You can see in the graph below just how energy prices have changed, and how consumer prices follow the same trend in a delayed pattern.
Is there any other support available?
Citizens Advice has compiled a lot of information on this for people who need it, and it's not just for low-income households. It's a great place to start if you need more information about help you could get.
How can I learn more about what's going on?
As well as the links we've dotted throughout this blog, we've compiled a few guides to explain what's going on with the energy crisis. Take a look: