The £400 energy grant: how will it be paid?

A £400 energy grant will be paid from next month to boost households during the cost of living crisis. We explain how the money will be paid, based on your energy supplier

Soup Boiling in Cooking Pans on Gas Burning Stove
(Image credit: Getty images)

A £400 energy bill discount is headed your way if you live in England, Scotland or Wales as part of the cost of living help package.

The energy bill grant was announced by former chancellor Rishi Sunak earlier this year, and has been kept in place by the new prime minister Liz Truss, alongside her measures to cap energy prices to around £2,500 for average typical use

This £400 energy grant has been expanded to cover some of those initially excluded, such as 850,000 park home residents and 585,000 renters whose landlords pay their energy bills.

Between the new cap and the £400 grant, a household with typical levels of energy use may see their bills increase by around 6.5% from the start of next month, rather than the 80% increase that would have taken place under the old energy price cap.

The government has given energy suppliers a certain amount of freedom over how to hand out the £400 grant, but we now have details from most of them on exactly how it will be handled.

Note that the £400 grant replaces the £200 energy ‘rebate’ the government promised earlier this year - a payment that households were expected to pay back from April 2023. 

You do not have to pay back the £400 - as former chancellor Rishi Sunak put it, “not a penny to repay."

Here’s how the rebate will be paid by the various main energy suppliers.

When will the £400 energy grant be paid?

The first thing to be aware of is that the payments will start being paid from October 2022, and will not be a single lump sum payment. Instead the £400 will be spread out and paid incrementally over the following six months.

You do not have to apply for it, but you should be aware of how to expect the discount to impact how you pay for energy bills.

HOW WILL BRITISH GAS PAY THE £400 ENERGY GRANT?

If you pay by Direct Debit, as most British Gas customers do, you will receive the £400 grant as six direct payments into your bank account over a six-month period - once you’ve paid your monthly Direct Debit. So you’ll pay your bill as usual via your monthly Direct Debit and then receive what looks like a refund to your bank account.

In an email to customers, British Gas said: "For Direct Debit customers, we'll send the discount straight to your bank each month - like a refund - once your Direct Debit has gone through.

"For example, if your Direct Debit is £100 a month, you'd pay as normal. Then a few days later, £67 will be paid into your bank account.”

If you pay by credit, in other words you receive your bill and then pay it by card, cash or cheque, the discount will be automatically applied to your account in the first week of each month and added to your bill.

HOW WILL EDF PAY THE £400 ENERGY GRANT?

Like British Gas customers, if you’re an EDF customer who pays by Direct Debit you’ll receive the £400 grant as six direct payments to your bank account over a six-month period, after you’ve paid their monthly Direct Debit.

Again, if you pay by credit, in other words you receive your bill and then pay it by card, cash or cheque, the discount will be automatically applied to your account in the first week of each month and taken off your bill.

How will OVO pay the £400 energy grant?

If you pay your OVO Energy bill by Direct Debit, then the usual discount will be applied directly “shortly after” the initial payment has been made.

However, if you pay on demand, the discount will instead be credited onto your account in the first week of each month.

How will Scottish Power pay the £400 energy grant?

As with other suppliers, Scottish Power will be paying the grant in six payments, with the first two months being for £66, followed by £67 from December onwards.

Those who pay by monthly Direct Debit will see the discount issued as a refund to their bank account after the initial Direct Debit has been collected, while those who pay on demand will see the discount applied automatically to their account during the first week of each month.

Prepayment meter customers will either have the discount applied automatically or receive a voucher, by post or email.

HOW WILL E.ON PAY THE £400 ENERGY GRANT?

If you’re an E.ON customer who pays by Direct Debit, you will see the six discounts over six months taken off your bill before your Direct Debit is taken.

E.ON customers who pay on receipt of their bill will see the money automatically applied as a credit to their energy accounts in the first week of each month. It will show up as a credit in the payments section of your monthly bill.

HOW WILL SHELL ENERGY PAY THE £400 ENERGY GRANT?

If you’re a Shell Energy customer who pays by Direct Debit you will see the six discounts over six months taken off your bill before your Direct Debit is taken.

This means that if your Direct Debit is £120, for example, Shell Energy will deduct £66 in October and November, and then £67 in December, January, February and March - making your Direct Debit £54 in October and November, and £53 December to March.

Shell Energy told us customers who pay their bill by card, cash or cheque - will see the discount appear on their bill as an extra payment each month from October to March, so they’ll owe less than they would otherwise - £66 the first two months and £67 thereafter.

In an email to customers Shell said: “The discount will appear on or around the 7th of each month. You can see it, along with how much you owe, on your bill or in the ‘Account Summary’ section of your online account”

How will Bulb pay the £400 energy grant?

Bulb customers will see the grant paid in monthly installments of £66 in October, £66 in November, and £67 each month from December to March.

For those who pay the same amount each month, it will be dedicated from their monthly payments, while for those on variable Direct Debits, an account credit worth those figures will be added to the account each month. Any excess credit will be carried over to the following month.

For smart prepay customers, the payment will be added as a credit to your account, while vouchers will be sent to non-smart prepay users, which they can redeem wherever they would normally top up their meter.

How will Utility Warehouse pay the £400 energy grant?

Utility Warehouse customers will get the grant in six automatic payments from October. The first payments of £66 each will be applied to their bills for October and November, with £67 then paid each month from December through to March.

Customers with a smart prepayment meter will see the payments sent remotely to the meter at the beginning of the month, and will be available to use within a few days. Those with traditional prepayment meters will instead be sent a voucher which can be redeemed at any PayPoint counter.

Utility Warehouse warned that it may take up to 11 working days for the vouchers to be delivered, while you will need to show some form of photo ID in order to claim the voucher.

How will Octopus Energy pay the £400 energy grant?

Octopus has said it will reduce bills for Direct Debit customers by £67 each month for six months from October. This will happen immediately, so that households can immediately feel the benefit.

For those who don’t pay by Direct Debit, accounts will be credited by £67 each month. 

IF I’M ON A PREPAYMENT METER, HOW WILL I GET THE £400 ENERGY GRANT?

Smart prepayment meter  customers will see the discount credited directly to their meters in the first week of each month of delivery - you won’t have to take any action at all.

Traditional prepayment meter customers will receive a redeemable EBSS Energy Bill discount voucher or Special Action Messages (SAMs) via SMS text, email or post in the first week of each month. You will need to redeem these at your usual top-up point. E.ON told us its vouchers will likely only be redeemable at the Post Office, not at all top-up locations.

Who will get the £400 energy grant?

More than 30 million households in England, Scotland and Wales will benefit from the £400 energy grant, while equivalent support will be provided to households in Northern Ireland through the Northern Ireland Energy Bills Support Scheme (NI EBSS).

This payment will be made to all households that pay for their energy and are connected to the electricity mains, regardless of their income. The grant will also now be paid to those who were previously excluded from the scheme. This includes park home residents and those living on houseboats.

The discount will be provided each month, irrespective of whether you pay monthly, quarterly or have an associated payment card. You’ll also still be eligible for the discount even if your housing circumstances change during the period.

The rebate can be donated to charities like Christians Against Poverty (opens in new tab) to help poorer households if you feel you don’t need it.

Will I get the £400 rebate if I am renting?

Yes. Whether you rent and pay the energy bills OR pay an ‘all-in’ rent to your landlord that includes bills (in other words, your name is not on the utility bills and you do not directly pay them) you will receive the £400 rebate.

Previously, tenants who pay an ‘all-in’ rent were excluded but the government has stated it is committed to seeing all households receive the same support for their energy bills.

Landlords who let their property will be legally required to pass on the £400 discount to tenants who pay all-inclusive rent and bills.

This legislation will be introduced after Citizens Advice (opens in new tab) highlighted 585,000 households were essentially ‘at the mercy of their landlords' because the discount was set up to be given directly to the bill payer.

WILL I GET THE £400 REBATE IF I AM A PARK HOME TENANT OR LIVE ON A HOUSEBOAT?

If you are one of the 850,000 households that live in a mobile home, like a park home or a houseboat, you will also receive the £400 grant.

The government stated: “Additional funding will be made available so that £400 payments will be extended to include people such as park home residents.”

Previously, park home residents and those living on houseboats were excluded from the support. Like an ‘all-in’ tenant, park home residents pay a ‘pitch’ fee to the park home owner for use of the site and its energy facilities and won’t see the energy grant themselves. Similarly, if you live on a houseboat where there is also no direct domestic energy provider. 

It’s not clear exactly how the support will be distributed. We’ll update this article as soon as we know more.

WILL I GET THE £400 REBATE IF I AM OFF-GRID?

Not everyone uses the gas and electricity grid, instead powering their homes through heating oil or alternative fuels.

The government has said that equivalent support will be provided to people in this position, though we are still waiting for the details on how that will work.

In addition, there will be an additional payment of £100 to households who are not able to receive support for their heating costs through the Energy Price Guarantee. This might be because they live in an area that is not served by the gas or electricity grid such as Northumberland and the remote Scottish Islands and Peninsulas. The £100 payment aims to compensate for the rising costs of alternative fuels such as heating oil.

Do I need to pay the £400 energy grant back?

Under the original £200 support scheme, the money would have been paid back in the form of higher energy bills. 

However, that is no longer the case ‒ the £400 energy grant is not a loan, and is money that you can keep.

What other help will be available to help with the cost of living?

Other measures have also been introduced to help with the cost of living crisis, which you may qualify for depending on your circumstances.

These measures include:

The whole cost of living package means around eight million households will receive at least £1,500 - equal to the estimated average energy price cap rise over this year.

In addition, more support measures are being introduced to ensure that consumers are safe from fraud related to the payment.

IS OTHER HELP AVAILABLE FOR HIGH ENERGY BILLS?

There is help with energy costs available if you’re struggling with your bills, while energy suppliers also have hardship funds to help their customers in need.

It may also be worth speaking to debt charities like StepChange (opens in new tab) or National Debtline (opens in new tab) if you are currently unable to pay your bills and need help.

You may also find our article on unfair direct debit increases useful. See how The Money Edit helped one reader bring her direct debit down after her energy company hiked it from from £117 to £369.

A new GOV.UK website (opens in new tab), originally available through the Simple Energy Advice (SEA) service, offers a breakdown of support available through various schemes and how much financial support they can receive towards energy improvements.

Want more?

We've joined forces with our friends at Look After My Bills (opens in new tab) on a free money-saving tips email which you can sign up to below.

Katie is staff writer at The Money Edit. She was the former staff writer at The Times and The Sunday Times. Her experience includes writing about personal finance, culture, travel and interviews celebrities.  Her investigative work on financial abuse resulted in a number of mortgage prisoners being set free - and a nomination for the Best Personal Finance Story of the Year in the Headlinemoney awards 2021.

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