What is the £400 energy grant and how will it be paid?

The Energy Bills Support Scheme – the government’s £400 energy grant – is a rare sliver of good news amid a tumultuous time for UK consumers.

The energy grant is a £400 energy bill discount that will be made to households in England, Scotland and Wales. Households in Northern Ireland will get similar support.

The energy bill rebate, which was announced by former chancellor Rishi Sunak, is still in place under the new government and will be joined by prime minister Liz Truss’s Energy Price Guarantee, which aims to limit energy prices to around £2,500 for the average user.

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For a household with average energy use, the £400 grant coupled with the new cap will result in energy bills rising by 6.5%, significantly lower than the 80% rise that would have occurred without Truss’s energy price cap freeze.

Sunak‘s original proposal was for a £200 support scheme that would be clawed back through people’s energy bills. But that was ditched for the £400 energy grant that does not need to be paid back. Instead, it will be funded by a windfall tax on oil and gas companies.

How will I get the £400 energy grant?

The discount will be spread out over the next six months. Households will get the discount each month, irrespective of their income and whether they pay their bill on a monthly or quarterly basis.

You are not required to apply for the discount as it will be automatically applied to your energy account. You should not have to contact your energy supplier unless you have not received the first instalment by the end of October.

If you pay for your electricity by pre-paid meter, you should get the discount applied in the first week of every month. You will either get an automatic credit when you top up your card, or you will be sent vouchers by text message, email or through the post – so make sure your energy supplier has up-to-date contact details for you.

If you have a “smart” pre-paid meter, the discount will be automatically applied in the first week of every month.

If you live in non-standard accommodation – on a caravan park or in a houseboat, for example, or if you live “off-grid”, the government has said it will provide “equivalent support”.

If you pay for your electricity as part of your rent – and that covers almost 585,000 people, or 13% of renters, according to Citizens Advice – the landlord must not charge you more for your electricity than they pay for it. So they should pass on the discount to you.

Distribution of the £400 energy grant may vary from supplier to provider as the government has left it to them to decide how they want to distribute it. Here’s how each provider is planning to apply it.

How will my energy provider apply the discount?

British Gas

Most British Gas customers pay via direct debit, so they will receive the amount in the form of six direct payments, spread out over six months.

After you have paid your monthly direct debit, then it appears that you will receive a refund to your bank account.

If you pay by credit, then the discount will be applied to your bill in the first week of the month.

EDF

EDF will pay the £400 bill discount in a similar way to British Gas.

OVO

In the case of OVO, the discount will be applied directly shortly after the initial payment amount has been deducted.

And if your payment is taken on a pay-as-you-go (PAYG) basis, the discount will be credited in the first week of each month into your account.

Scottish Power

Scottish Power will also be paying the amount in the form of six payments, however those payments will vary a little. The first two payments will amount to £66, meanwhile starting from December, the payment amount will marginally rise to £67.

If you pay by monthly direct debit, you will receive the discount in the form of a refund once the initial direct debit payment has been made. Those paying on PAYG will automatically receive the discount in the first week of the month.

E.ON

For E.ON customers that pay via direct debit, the discount will be applied before the direct debit takes place.

PAYG customers will see credit added to the payment section of their bill each month.

Shell Energy

Shell Energy customers who pay via direct debit will receive six payments across six months, before the direct debit amount is deducted.

Shell Energy told The Money Edit, MoneyWeek’s sister publication, that customers who pay for energy via cash, card or cheque will see the discount in the form of an extra payment section that appears on the bill from October through to March. Bulb

For Bulb customers, the discount will be paid in monthly instalments worth £66 in both October and in November and the figure will increase to £67 from December to March.

Those who pay the same amount every month will see the amount deducted from their monthly payments. Meanwhile, credit worth that amount will be added to the accounts of those who are on variable direct debits.

Smart prepay customers will see the payment added in the form of credit to accounts.

Utility Warehouse

Utility Warehouse customers will receive the discount in the form of six automatic payments, starting from October. Customers will receive a discount of £66 from October to November and they will receive £67 from December to March.

Customers who have a smart prepayment meter will receive the payments remotely to the meter at the start of the month.

If you have a traditional prepayment you will receive a voucher which will be redeemable at any PayPoint counter once you show a photo ID. Although Utility Warehouse warns that customers may have to wait up to 11 working days until they receive their vouchers.

Octopus Energy

Octopus Energy’s Direct Debit customers will see their bill fall by £67 for six months starting from October.

Customers who do not pay via direct debit will receive monthly credit payments of £67.