Energy Prices Act 2022 and expenditure on energy schemes – Q1 2023

Statement

I am tabling this statement to update Hon. Members under the Energy Prices Act 2022, in line with the requirement under the Act for quarterly reporting to Parliament on expenditure incurred under it.

This is the second quarterly report on energy scheme expenditure under section 14 of the Act and covers the period from 1 January to 31 March 2023.

Energy prices are volatile, and changes will affect the outturn cost of the schemes.

The Government has prioritised support for those most in need, whilst ensuring we act in a fiscally responsible way. The Government has covered nearly half a typical household’s energy bill through the Energy Price Guarantee and Energy Bills Support Scheme since October – with a typical household saving around £1,500. The Energy Price Guarantee scheme will continue at £2,500 to the end of June.

Expenditure incurred

Future costs

Forecasts of FY23-24 (1 April 2023 – 31 March 2024) expenditure for the energy schemes were published by the Office for Budget Responsibility on 15^th March 2023 as part of the Spring Budget 2023. The forecasts provided were: £4.0bn for the Energy Price Guarantee, £0.5bn for the Energy Bills Relief Scheme, £0.5bn for the Energy Bills Discount Scheme and £0.4bn for the Energy Bills Discount Scheme heat network support.

The costs in FY23-24 for other energy support schemes are forecast to total £0.5bn. This includes the Energy Bills Support Scheme Alternative Funding, the Domestic Alternative Fuel Payment, the Non-domestic Alternative Fuel Payment, and Prepayment Meter Levelisation (Energy Price Guarantee).

Separately, the forecast for Heat Networks Alternative Dispute Resolution bodies funding is £0.3m.

All forecasts are provided on an accruals basis. Ongoing work on the reconciliation of scheme costs may impact the FY23-24 forecasts.

To note:

1. 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. Some of the expenditure incurred in the last quarter will be recognised in FY23-24, where it relates to energy scheme support from 1 April 2023 onwards.
2. The figures for expenditure incurred do not include accrued costs, i.e., expected FY22-23 (1 April 2022 – 31 March 2023) costs which are yet to be paid out. Therefore the figures for expenditure incurred may not represent the full cost of schemes in FY22-23.
3. 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.
4. The Energy Bills Discount Scheme launched for UK businesses, charities and the public sector on 1 April 2023.
5. Heat Networks Alternative Dispute Resolution bodies funding utilises the power conferred by section 13 of the Energy Prices Act 2022. This scheme has not incurred expenditure to 31 March 2023. This funding is separate to the Energy Bills Discount Scheme heat network support.
6. Administrative costs are not included in figures.