Energy Prices Act 2022: Energy Scheme Expenditure
(7 months ago)
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The Secretary of State for Energy Security and Net Zero (Claire Coutinho)
I am tabling this statement to update hon. Members under the Energy Prices Act 2022, in line with the requirement under that Act for quarterly reporting to Parliament on expenditure incurred under it. £ million a) Expenditure incurred between 1 April and 30 June 2023 a) Expenditure incurred between 1 July and 30 September 2023 b) Cumulative expenditure incurred to 30 September 2023 Energy Bills Support Scheme GB and NI 3 0 11,873 Energy Bills Support Scheme Alternative Funding 2 3 262 Energy Price Guarantee GB and NI 2,307 58 23,364 Domestic Alternative Fuel Payment (27) (3) 589 Energy Bills Relief Scheme GB and NI 1,856 108 7,522 Energy Bills Discount Scheme GB and NI 25 89 114 Energy Bills Discount Scheme Heat Networks GB and NI 1 15 16 Non-domestic Alternative Fuel Payment 5 (5) 62 Heat Networks Alternative Dispute Resolution Bodies 0.2 0 0.2
This is the third report on energy scheme expenditure under section 14 of the Act and covers the quarters from 1 April to 30 June 2023, and from 1 July to 30 September 2023.
Energy prices are volatile and changes will affect the outturn cost of the schemes. The Government have prioritised support for those most in need, while ensuring that we act in a fiscally responsible way.
Since Putin’s illegal invasion of Ukraine caused energy bills to rise, the Government have stepped in with more than £40 billion of financial support. Over £43 billion was spent between October 2022 and September 2023, the most ever provided to subsidise household bills in UK history. This was in part funded through taxing energy producers’ excess profits, with the Government’s windfall tax on producers expected to raise over £26 billion by March 2029.1
Government support schemes covered nearly half of household energy bills between October 2022 and June 2023, saving households £1,500 on average.2
Future costs
Forecasts of FY23-24 (1 April 2023 to 31 March 2024) expenditure for the energy schemes were published by the Office for Budget Responsibility on 22 November 2023 as part of the autumn statement 2023. The forecasts provided were: £4.3 billion for the energy price guarantee, including prepayment meter levelisation; and £0.6 billion for non-domestic energy support, including energy bills relief scheme, energy bills discount scheme and energy bills discount scheme heat network support.
The costs in FY23-24 for other energy support schemes are expected to be net cash returns from suppliers and local authorities. This includes the energy bills support scheme, energy bills support scheme alternative funding, the domestic alternative fuel payment, and the non-domestic alternative fuel payment.
Separately, the forecast for heat networks alternative dispute resolution bodies funding is £0.2 million.
All forecasts are provided on an accruals basis. Ongoing work on the reconciliation of scheme costs may impact FY23-24 and FY24-25 forecasts.
To note:
Figures for expenditure incurred are on a cash basis. This includes payments made by the Department for Energy Security and Net Zero to energy suppliers, local authorities and other scheme operators.
Where the Department has received net cash back from energy suppliers or local authorities as part of the reconciliation of energy schemes, this is shown by a negative cash figure.
Some expenditure incurred in FY23-24 may relate to FY22-23. Therefore, forecasts for FY23-24 may be lower than expenditure incurred in FY23-24.
The energy bills support scheme in Great Britain was not made under the powers conferred by the Energy Prices Act 2022, but it is included for completeness.
Heat networks alternative dispute resolution bodies funding utilises the power conferred by section 13 of the Energy Prices Act 2022. This funding is separate from the energy bills discount scheme heat network support.
Administrative costs are not included in figures.
1 DESNZ, Press Release, 8 June 2023
2 Hansard, 13 November 2023, https://questions-statements.parliament.uk/written-questions/detail/2023-11-07/284
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