Households in Scotland will be protected from sharp rises in their energy costs this winter through the UK Government’s Energy Prices Act.
Within the universal scheme, it is a legal obligation on agents and landlords to ensure tenants, whose bills are included in their rents, benefit from the various elements of financial support package.
What is the Energy Prices Act?
The Energy Prices Act includes the Energy Price Guarantee which automatically reduces the unit cost of electricity and gas, so the typical household pays, on average, around £2,500 a year on their energy bill from 1 October 2022 until 31 March 2023.
The Energy Bills Support Scheme is a £400 non-repayable discount to eligible households, to help with their energy bills over winter 2022/23. This will be applied to customers’ electricity bills in six payments: £66 in October and November, and £67 in December, January, February and March.
For households who are not on the mains gas grid and therefore use alternative fuels such as heating oil to heat their homes, the Alternative Fuel Payment will be a one-off £100. This will also be delivered through customers’ electricity bills.
The Energy Bill Relief Scheme provides financial assistance on energy bills for all eligible non-domestic customers, including businesses, charities and public sector organisations.
How will tenants with all-inclusive rents benefit from the energy bill support?
The advice is that agents and landlords who resell energy to tenants based on their usage should pass the discounted payments on appropriately, in line with Ofgem rules to protect tenants, and not charge more than the fixed unit price.
If tenants are charged a fixed rate for bills within the rent (all inclusive), agents and landlords should ensure the amount charged does not exceed the Energy Price Guarantee unit price and that the £400 Energy Bills Support Scheme payment is also passed on to their tenant.
Agents and landlords are also obliged to provide information to the tenant to help them understand how they are benefitting from the financial support and should also be prepared to provide information to the UK Government for monitoring purposes to ensure those it intended to help are directly benefitting.
Pre-payment meter customers
For tenants on pre-payment meters, the Energy Price Guarantee unit rate will automatically be applied by the electricity supplier. Smart pre-payment meters will be credited automatically with the Energy Bills Support Scheme on the first week of each month from October to March, totalling £400. Tenants on traditional pre-payment meters will receive redeemable vouchers by text, email, post, or an automatic credit when topping up. This will be determined by the electricity supplier.
The future of energy bills
The UK Government has said that any universal support for energy bills beyond April next year will be targeted at those most in need with a renewed focus on incentivising energy efficiency.
What those incentives will look like and whether they will be available in all UK nations, will be of major interest to the private rented sector, with property professionals warning the Scottish Government’s ambitious energy efficiency targets for domestic properties are likely to prove too high without a significant programme of funding to supplement homeowners’ investments.