Source · Select Committees · Public Accounts Committee
Recommendation 5
5
Accepted
Provide update on household energy affordability plans for winter 2023-24 and future scheme reforms.
Conclusion
The Department does not yet know how its plans for winter 2023–24, or once support ends in April 2024, will impact households, or how it will ensure the energy retail market provides a fair deal for consumers. At the time of our evidence session, the Department’s plans for winter 2023–24 meant household energy bills are expected to increase by £775 in 2023–24 if energy prices remain high. The government has committed to consulting on amending the EPG as soon as is feasible after April 2023 so that those who use very large volumes of energy have their support capped, whilst ensuring most households can continue to benefit. At the time of the NAO report, when the scheme comes to an end in April 2024, the Department did not expect the average annual bill to be much above £3,000, meaning that withdrawing the EPG would not have a sudden significant impact on consumer bills. However, wholesale gas prices are volatile and outside of the Department’s control. The government also announced it will develop a new approach to consumer protection in energy through a wider retail market reform, including options such as social tariffs. It has not yet published further information on what this would look like and how it will bring back supplier competition in the market. Recommendation 5: The Department should write to the committee within 6 months to provide an update on: • its plans to ensure energy affordability in winter 2023–24; and • its progress with future plans for the domestic scheme, such as capping support to those that use very large volumes of energy and introducing discounts on bills for households on benefits.
Government Response Summary
The government states it will keep the Energy Price Guarantee (EPG) in place as a safeguard for winter 2023-24 and continue the Energy Bills Discount Scheme (EBDS) for non-domestic customers. It has also committed to £900 in cost-of-living payments for vulnerable households and decided not to cap support for high energy users, keeping the EPG universal.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. prices are forecast to continue to fall. Energy prices are affected by a range of factors and government is planning for a range of possible scenarios. This planning is being guided by extensive experience in delivering household support last year that is also taking onboard the lessons learned from doing so. The EPG will remain in place as a safeguard over this coming winter in the event prices spike again, and the EBDS will continue to provide support to non- domestic customers who have a contract with a licensed energy supplier until 31 March 2024. Some non-domestic customers who procure their energy from unlicensed energy providers will also be able to claim support under the Non-Standard EBDS until then. In the meantime, the government has already committed to provide up to £900 in cost- of-living payments over 2023-24 paid across three instalments to the most vulnerable households on eligible means-tested benefits. This is in addition to £150 for pensioner households and £300 for individuals on eligible means-tested disability benefits. In relation to capping support to those that use very large volumes of energy, high energy use is unavoidable for certain vulnerable households, for instance as a result of necessary medical equipment. As such, government have concluded that it should not progress with this option, and that support through the Energy Price Guarantee (EPG) should remain universal.