The UK Government is considering a new support measure that could reduce energy bills by up to £200 for some households as rising wholesale gas prices put pressure on consumers. The proposed Energy Price Protection Payment (EPPP) would target people receiving benefits and others considered in need of assistance. The plan comes as the energy price cap is set to increase in October, adding to concerns over household costs.
Government Considers Targeted Support as Energy Prices Increase
According to The Telegraph, the Government has been developing the EPPP after higher energy costs linked to the Iran conflict pushed up global oil and gas prices. The scheme could be introduced in January, although no final decision has been made on whether it will proceed or how much support it would provide.
The energy price cap is expected to rise from £1,663 to £1,723 in October, according to reports from The Independent. Analysts cited by the newspaper have also predicted a further increase in the new year, which would raise concerns about the impact on households already facing fuel poverty.
The proposed payment would apply to recipients of the Warm Homes Discount and could include other households judged to require support. The existing discount is available to people receiving certain benefits, but sources told The Telegraph that it does not cover an estimated 2.5 million additional households considered to be in fuel poverty.
Discussions are continuing over the scope of any intervention. Officials are considering whether support should focus only on benefits claimants or form part of a wider package that could include broader measures for households. A government spokesperson said the Chancellor remained focused on helping families and businesses manage cost pressures. The Government has already removed VAT from electricity bills, which is expected to reduce the typical Ofgem price cap figure by around £45 from October.
Wider Measures Discussed to Reduce Household Energy Costs
The Government is also examining other options to lower energy bills beyond direct payments. According to The Telegraph, ministers are looking at changes to network charges and green levies as possible longer-term measures.
Last year, the Government reduced household bills by £150 through changes involving the Energy Company Obligation and the renewable obligation. More than 120 businesses, trade groups and charities, including Nationwide, Octopus Energy and British Gas, have called for further reductions in levies, arguing that moving electricity charges from bills to government spending could reduce costs for households and businesses.
Another proposal being considered is a so-called block tariff. Energy Secretary Miatta Fahnbulleh is reported to support a system that would provide households with a discounted amount of electricity and gas, with usage above that level charged at the standard rate.
Ofgem director general for markets Neil Kenward said international gas prices were continuing to influence UK energy costs. According to Ofgem, consumers could find savings by choosing fixed tariffs, with some available at £100 or more below the October price cap, while smart meter customers may also access cheaper electricity rates during off-peak periods. The Government has not confirmed when a final decision on the EPPP will be made. The value and coverage of the scheme will depend on future energy prices and public finances.
