Energy Bills Support - Public Accounts Committee - UK Inquiry Tracker

Energy Bills Support

Public Accounts Committee Closed Inquiry

Opened: 18 Jan 2023 Closed: 24 Sep 2023 Parliament page

In September 2022 Government announced the Energy Price Guarantee Scheme and Energy Bill Relief Scheme in response to the energy price crisis. Following on from work done by the National Audit Office on Energy bill support , the Committee will question senior officials at the Department for Business, Energy and … Read more

3 Recommendations

25 Conclusions

1 Report

2 Oral sessions

5 Letters

2 Events

Activity timeline 9 events

24 Sep
2023

Report published

Treasury minutes: Government response to the Committee of Public Accounts on the Fifty-eighth report from Session 2022-23

7 Sep
2023

Correspondence

Correspondence from James Bowler, Permanent Secretary, HM Treasury, re Additional information: Recommendation 4a Forty-eighth Report of Ses…

16 Jun
2023

Report published

Fifty-Eighth Report - Energy bills support

17 Apr
2023

Correspondence

Correspondence from Rt Hon Grant Shapps MP, Secretary of State, Department for Energy Security and Net Zero, re Contingent Liability Notifi…

17 Apr
2023

Correspondence

Correspondence from Jeremy Pocklington CB, Permanent Secretary, Department for Energy Security and Net Zero, re Energy Bills Discount Schem…

28 Mar
2023

Correspondence

Correspondence from James Bowler, Permanent Secretary, HM Treasury, re follow up to question raised at the Public Accounts Committee on Ene…

21 Mar
2023

Correspondence

Correspondence from Jeremy Pocklington CB, Permanent Secretary, Department for Energy Security and Net Zero, re Energy Bills Support, dated…

27 Feb
2023

Oral evidence

Energy bills support

23 Feb
2023

Oral evidence

Energy bills support pre-panel

Oral evidence sessions 2 sessions

27 Feb 2023

View on parliament.uk

Energy bills support

James Bowler CB · HM Treasury Jeremy Pocklington CB · Ministry of Defence Jonathan Mills · Department for Energy Security and Net Zero Phil Duffy · HM Treasury Sarah Munby · Department for Business, Energy and Industrial Strategy

23 Feb 2023

View on parliament.uk

Energy bills support pre-panel

Andy Manning · Citizens Advice Dhara Vyas · Energy UK Kate Nicholls · UK Hospitality Paul Wilson · Federation of Small Businesses

Reports 1 report · click to expand

Title	HC No.	Published	Items	Response
Fifty-Eighth Report - Energy bills support	HC 1074	16 Jun 2023	28	Response document linked

Recommendations & Conclusions

28 results

2 Recommendation

Fifty-Eighth Report - Energy bills…

Publish analysis of unredeemed energy vouchers and actions to increase household redemption rates.

The Department is still not doing enough to ensure that support reaches the two million consumers on prepayment meters. Those on prepayment meters are typically on more expensive energy tariffs due to the cost of the systems used to run … Read more

HM Treasury

3 Conclusion

Fifty-Eighth Report - Energy bills…

Report on fraud and error rates in energy support schemes and plans for reduction.

The Department drew on lessons it had learnt from financial support it provided during the pandemic to reduce the risk of fraud and error of the schemes, but does not yet know how successful this has been. The Department estimates … Read more

HM Treasury

4 Conclusion

Fifty-Eighth Report - Energy bills…

Provide analysis of policy impacts on businesses and prevent a financial cliff edge after March 2023.

HM Treasury and the Department do not fully understand the pressures the non-domestic sector will face when the EBRS ends in March 2023, or the potential risk of insolvencies. Many organisations are suffering financially from the aftermath of the pandemic … Read more HM Treasury and the Department do not fully understand the pressures the non-domestic sector will face when the EBRS ends in March 2023, or the potential risk of insolvencies. Many organisations are suffering financially from the aftermath of the pandemic and this has been exacerbated by recent high energy prices. The Department wanted the EBRS to achieve economic benefits, but it risks undermining this if its decision to withdraw support results in increased insolvencies. From April 2023, support for the non-domestic sector will reduce significantly when the Department replaces the EBRS with the Energy Bills Discount Scheme (EBDS) if energy prices remain high. While gas prices have recently fallen significantly from the record-high levels last year, some non-domestic consumers will not feel the benefit if they are trapped in fixed tariffs that were set in late- summer 2022. Additional financial support for energy bills is available for Energy and Trade Intensive Industries, but not for other sectors that can have high energy usage, such as the hospitality sector. HM Treasury expects that other changes from April 2023, such as reduction in business rates, will offset reductions in energy bills support for these sectors. The challenges of the non-domestic sector dealing with rising energy bills has exposed the lack of regulation and visibility that Ofgem and the Department have over the way non-domestic energy market operates. Recommendation 4a: The Treasury should, in parallel to its Treasury Minute response, provide details of its analysis of how the changes to business rates, taxes and energy support will affect businesses across different sectors, and outline how Energy bills support 7 it will ensure that businesses will not face a financial cliff edge after March 2023. It must also monitor and report on the effectiveness of the additional financial support made available to Energy and Trade Intensive Industries in ensuring the resilience of those industries. Rec Show less

HM Treasury

5 Conclusion

Fifty-Eighth Report - Energy bills…

Provide update on household energy affordability plans for winter 2023-24 and future scheme reforms.

The Department does not yet know how its plans for winter 2023–24, or once support ends in April 2024, will impact households, or how it will ensure the energy retail market provides a fair deal for consumers. At the time … Read more

HM Treasury

6 Recommendation

Fifty-Eighth Report - Energy bills…

Set out timeline for REMA and plan to enhance electricity sector resilience against price shocks.

We are very concerned about the Department’s lack of urgency in addressing the energy market failures that are leading to high energy bills for consumers. During 2022–23, the UK experienced record-high wholesale gas prices. Since 2019, Ofgem has set a … Read more

HM Treasury

1 Conclusion

Fifty-Eighth Report - Energy bills…

Committee took evidence on energy bills support from various stakeholders.

On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Energy Security and Net Zero (The Department)2, the Former Permanent Secretary at the Department for Business, Energy and Industrial Strategy (BEIS), … Read more

HM Treasury

23 Conclusion

Fifty-Eighth Report - Energy bills…

Ofgem energy price cap significantly increased due to rising wholesale energy costs.

Since 2019, the Office of Gas and Electricity Markets (Ofgem) has set a price cap on the price per unit of gas and electricity for customers on standard default tariffs, which apply to consumers who have not signed up for … Read more

HM Treasury

7 Conclusion

Fifty-Eighth Report - Energy bills…

Off-grid homes and businesses experienced delays in receiving alternative fuel support.

Some off-grid homes and businesses had to wait longer to receive support compared to the schemes to support consumers connected to the energy grid. The Department started delivering payments through the non-domestic Alternative Fuel Payment Scheme in February 2023. On … Read more

HM Treasury

8 Conclusion

Fifty-Eighth Report - Energy bills…

Delays in alternative fuel support disproportionately impacted Northern Ireland due to higher usage.

The delays to introducing support schemes for customers who use alternative fuels had a greater impact on consumers in Northern Ireland because of the higher percentage of consumers that use these fuels. More than two-thirds (68%) of households in Northern … Read more

HM Treasury

9 Conclusion

Fifty-Eighth Report - Energy bills…

Delays experienced in providing energy bill support to off-grid and rural households.

We asked the Department what were the causes of other delays in getting support to customers. The Former Permanent Secretary told us that, in terms of operational challenges, the most difficult schemes were those where people were being asked to … Read more

HM Treasury

10 Conclusion

Fifty-Eighth Report - Energy bills…

Complexity of universal energy support schemes delayed aid for vulnerable consumers.

The Department told us that an important lesson it had learnt from the schemes was the complexity in implementing a universal scheme to reach all energy consumers living under different circumstances. The Former Permanent Secretary explained that the Department did … Read more

HM Treasury

11 Recommendation

Fifty-Eighth Report - Energy bills…

Ensure administrative barriers do not hinder timely energy support for prepayment meter customers.

Prepayment meter customers pay for their energy in advance by topping up a meter with a smart card, ‘key’ or cash token. Those on prepayment meters are typically on more expensive energy tariffs due to the cost of the systems … Read more

HM Treasury

12 Conclusion

Fifty-Eighth Report - Energy bills…

Government and suppliers launched campaigns to increase prepayment meter voucher redemption rates.

In response to our report, in January 2023, the government told us that energy suppliers had sent vouchers to all two million customers who had a traditional prepayment meter. It explained that it was urging customers to redeem vouchers through … Read more

HM Treasury

13 Conclusion

Fifty-Eighth Report - Energy bills…

Significant regional disparities observed in energy support voucher redemption rates.

We asked witnesses about the take-up rates for the vouchers. The Department told us that 76% of vouchers had so far been redeemed across Great Britain. It accepted that take- up was lower in metropolitan areas, and that the take-up … Read more We asked witnesses about the take-up rates for the vouchers. The Department told us that 76% of vouchers had so far been redeemed across Great Britain. It accepted that take- up was lower in metropolitan areas, and that the take-up rate was just 60% in London.29 The NAO found that the Department believed that voucher redemption was likely to have been affected by a number of factors, including the weather (people might hold on to vouchers in anticipation of cold snap), voucher loss, and some people not opening their post.30 The Department told us that it thought that take-up in urban areas might also have been affected by changes in tenancy as it was more complicated to keep track of people in urban areas, particularly London. It explained that it had work underway to support this in the remaining weeks of the scheme. The Department told us that it will continue working to increase the redemption rates beyond the end of the scheme in April 2023.31 We asked what more government needed to do to ensure take-up of the vouchers. Citizens 24 Department of Energy & Climate Change, Understanding the behaviours of households in fuel poverty, July 2014 25 Committee of Public Accounts, Regulation of energy suppliers, Twenty-Fifth Report of Session 2022–23, HC 41, 13 November 2022 26 HM Treasury, Treasury Minutes Government Response to the Committee of Public Accounts on the Twenty-third to the Twenty-sixth reports from Session 2022–23, CP 781, January 2023 27 Department for Business, Energy & Industrial Strategy, Energy Bills Support Scheme – Guidance for Electricity Suppliers, November 2022 28 C&AG’s Report, para 3.13 29 Qq 161–163 30 C&AG’s Report, para 3.13 31 Qq 163–164 14 Energy bills support Advice told us that one in 20 people do not have the internet, and roughly one in 10 do not have some of the essential skills to engage digitally, so it would be important to ensure there are offline methods of delivering information about the vouchers.32 Show less

HM Treasury

14 Conclusion

Fifty-Eighth Report - Energy bills…

Concerns persist over forced installation of prepayment meters by energy suppliers.

We asked witnesses about recent press coverage that had exposed the practice of some energy suppliers forcibly installing prepayment meters in people’s homes. Ofgem banned British Gas from forced installation of prepayment meters as of February 2023 and made a … Read more

HM Treasury

15 Conclusion

Fifty-Eighth Report - Energy bills…

Rapid implementation of energy schemes created initial high fraud and error risks.

The Department had to design and implemented the schemes at speed to ensure they were in place for winter 2022–23. The Department took three weeks to implement the EPG and two months for the EBRS. At the start of the … Read more

HM Treasury

16 Conclusion

Fifty-Eighth Report - Energy bills…

Department leveraged pandemic experience and PSFA collaboration to mitigate energy scheme fraud risks.

The Department drew on lessons learnt from its financial support schemes during the pandemic to reduce the risk of fraud and error in the schemes.37 The Former Permanent Secretary told us that the Department’s previous experience from support schemes led … Read more

HM Treasury

17 Conclusion

Fifty-Eighth Report - Energy bills…

Universal energy schemes with no application process presented lower inherent fraud risks.

The Former Permanent Secretary told us that while the Department was “acutely conscious” of the fraud risks within the schemes, it thought that the design of the energy support schemes meant that the risks of fraud were much lower than … Read more

HM Treasury

18 Conclusion

Fifty-Eighth Report - Energy bills…

Non-domestic energy support schemes face higher fraud risks due to market complexity.

The NAO found that the risk of error was greater for EBRS than for EPG because the non-domestic energy market is more complex, less regulated by government and has a wider range of consumers. For example, energy usage and intensity … Read more

HM Treasury

19 Conclusion

Fifty-Eighth Report - Energy bills…

Department lacks estimates of overpayment rates for energy support schemes and evaluations.

We asked the Department whether it had an estimate of the rate of overpayment within the schemes. Both the Former Permanent Secretary and the Department told us that they did not have an overpayment figure, but that overall, the Department … Read more

HM Treasury

20 Conclusion

Fifty-Eighth Report - Energy bills…

Inconsistent sector inclusion in energy support schemes raises questions about criteria and understanding.

In April 2023, the government will replace the Energy Bill Relief Scheme with the Energy Bill Discount Scheme. This will support businesses for 12 months from April 2023 by providing a discount on their energy bills if wholesale prices are … Read more

HM Treasury

21 Conclusion

Fifty-Eighth Report - Energy bills…

Reduced energy support risks businesses closing and wider economic objectives for government.

The reduced support could risk the Department achieving its wider economic objectives for the EBRS, such as reducing the effect of inflation and protecting jobs.48 The Federation of Small Businesses (FSB) told us that if energy prices remained high and … Read more

HM Treasury

22 Conclusion

Fifty-Eighth Report - Energy bills…

Government provides diverse financial support to businesses beyond energy specific schemes.

HM Treasury told us it was providing a range of support to businesses and the public sector through a number of measures, not just the energy support schemes. For example, it pointed to support provided through: covid support schemes; a … Read more

HM Treasury

24 Conclusion

Fifty-Eighth Report - Energy bills…

Rising energy bills and EPG cap increase push more households into fuel poverty.

At the time of our evidence session, household bills were protected by the EPG cap at £2,500 until the end of March 2023, which will increase to £3,000 from April 2023 to March 2024.57 HM Treasury told the NAO that … Read more At the time of our evidence session, household bills were protected by the EPG cap at £2,500 until the end of March 2023, which will increase to £3,000 from April 2023 to March 2024.57 HM Treasury told the NAO that it did not have plans to extend the EBSS beyond April 2023. The combined impact of these changes mean that a typical household bill may increase by at least £400 in 2023–24 if wholesale energy prices remain around current levels. At the time of the NAO report, the Department expected that Ofgem’s price cap would not be much above £3,000 in April 2024, meaning withdrawing the EPG at that point would not have a sudden significant impact on consumers’ bills.58 The 52 Q 197 53 Qq 106–107, 187, 190 54 Q 20 55 Qq 2, 25 56 Qq 191–192, 197 57 C&AG’s Report, para 1.4 58 C&AG’s Report, paras 3.20, 3.22. In 2022–23, the EBSS contributed £400 to household energy bills. The ending of this support will therefore add £400 to household energy bills in 2023–24 Energy bills support 19 Department told us that its most recent estimates were that average household bills would be closer to £2,000 (although it did not specify a date) and would stabilise at that level for the foreseeable future.59 But these levels are still higher than average energy bills have been prior to summer 2022 (when it was £1,149 for an average household) , and so would represent a potential long-term substantial increase in household bills.60 However, the Department explained that wholesale gas prices are volatile.61 Energy UK told us that almost half of all households, were already spending more than 10% of their income after housing costs on energy, and so were considered as being in fuel poverty. Citizen’s Advice told us that of the 12 million households in fuel poverty, it was concerned about the three million people households who were on low income but were not in receipt of benefits, as they were considered as being in fuel poverty but would not receive any targeted support to help pay their en Show less

HM Treasury

25 Conclusion

Fifty-Eighth Report - Energy bills…

Government develops new energy market consumer protection as retail market struggles financially.

Following our evidence session government announced in its spring statement that it would maintain the EPG at £2,500 until the end of June 2023.63 The government has committed to consulting on amending the EPG as soon as is feasible after … Read more

HM Treasury

26 Conclusion

Fifty-Eighth Report - Energy bills…

Marginal electricity pricing links high gas prices to consumer bills, incurring huge public costs.

The approach to pricing electricity in the UK – known as marginal pricing - means that high wholesale gas prices results in high energy bills for consumers. This is because all electricity generators in the market are paid a fixed … Read more

HM Treasury

27 Conclusion

Fifty-Eighth Report - Energy bills…

Review of Electricity Market Arrangements lacks clear timeframe, risking future consumer energy costs.

We asked witnesses about the effectiveness of the marginal pricing system and whether what customers were being charged reflected the cost of producing the energy they used. The Department told us that it was looking into this issue through its … Read more We asked witnesses about the effectiveness of the marginal pricing system and whether what customers were being charged reflected the cost of producing the energy they used. The Department told us that it was looking into this issue through its Review of Electricity Market Arrangements (REMA).68 The REMA is a major electricity market reform the Department announced in July 2022, to support full decarbonisation of the electricity system by 2035 ensuring security of supply and cost effectiveness for consumers. It consulted on its review during summer 2022 and published the summary responses to the consultation on 7 March 2023. In the consultation, the Department stated that it will explore reforms that move away from marginal pricing. One alternative option is a pay- as-bid system, where participants receive the price of their bids/ offers rather than the bid of the highest priced supplier selected to provide supply. However, generators are likely to bid strategically, and be incentivised to bid at the price of the most expensive offer accepted. Of the 124 responses, respondents to the consultation were split over whether they supported this alternative. In its consultation document, the Department set out that it planned to determine the reforms needed during 2022–23 and establish a full delivery plan and oversee its implementation from the mid-2020’s in time to meet its target to decarbonise the UK power system by 2035. However, it has not yet made available any further details of the timeframe of the review.69 In the meantime, if gas prices increase again, consumers and taxpayers will be subject to significant costs again. The previous reform, the Electricity Market Reform, took two and a half years.70 The Department told us that one of the lessons it had learnt from the last 18 months had been to strengthen the case for more renewables and nuclear energy, and to make sure that the benefits are passed on to consumers, which it planned to achieve through the REMA.71 Show less

HM Treasury

28 Conclusion

Fifty-Eighth Report - Energy bills…

Decoupling electricity and gas prices needs careful reform for long-term consumer benefits.

We asked about whether the vast majority of the additional cost of energy to UK customers was going into increased profits for the energy sector. Energy UK told us that in looking at decoupling electricity and gas, the government should … Read more

HM Treasury

Correspondence 5 letters

7 Sep 2023 Correspondence from James Bowler, Permanent Secretary, HM Treasury, re Additional information: Recommendation 4a Forty-eighth Report of Session 2022-23 (Energy Bills Support), dated 14 August 2023

Parliament page

17 Apr 2023 Correspondence from Jeremy Pocklington CB, Permanent Secretary, Department for Energy Security and Net Zero, re Energy Bills Discount Scheme, dated 28 March 2023

Parliament page

17 Apr 2023 Correspondence from Rt Hon Grant Shapps MP, Secretary of State, Department for Energy Security and Net Zero, re Contingent Liability Notification: Energy Bills Discount Scheme, dated 27 March 2023

Parliament page

28 Mar 2023 Correspondence from James Bowler, Permanent Secretary, HM Treasury, re follow up to question raised at the Public Accounts Committee on Energy Bills Support on 27 February 2023, dated 16 March 2023

Parliament page

21 Mar 2023 Correspondence from Jeremy Pocklington CB, Permanent Secretary, Department for Energy Security and Net Zero, re Energy Bills Support, dated 10 March 2023

Parliament page