Tackling Energy prices by UK treasury




 2.1 The government has announced a significant package of support to reduce the pressure
from rising energy prices on households and businesses across the UK.1
2.2 To provide immediate support for households, an Energy Price Guarantee (EPG) will cap the
unit price that consumers pay for electricity and gas. This will mean the average household will
pay no more than £2,500 per year for a period of two years from October 2022, and is expected
to save at least £1,000 a year, although savings for individual households will vary according to
their energy use. The government will deliver £150 of the saving by covering the environmental
and social costs, including green levies, currently included in domestic energy bills for two years.
2


.3 This will be in addition to the £400 support all households will receive from the Energy Bills
Support Scheme (EBSS) over the coming winter.
2.4 Together, the EPG and EBSS will save the typical household at least £1,400 for the next year
compared to the October 2022 Price Cap.
2.5 The government will also provide an additional payment of £100 to compensate for the
rising costs of alternative heating fuels for UK households not able to receive support for heating
costs through the Energy Price Guarantee, for example if they are living in an area of the UK that
is not served by the gas grid.
2.6 The Energy Bill Relief Scheme (EBRS) is a temporary six-month scheme in Great Britain that
will protect businesses and other non-domestic energy users, including charities and public
sector organisations, from rising energy bills this winter by providing a discount on wholesale
gas and electricity prices. The government will publish a review into the operation of the
scheme in three months to inform decisions on future support after March 2023, focusing in
particular on identifying the most vulnerable non-domestic customers and how to continue
assisting them with energy costs. A parallel scheme based on the same criteria and offering
comparable support, but recognising the different market fundamentals, will be established in
Northern Ireland.
2.7 These temporary interventions will be funded by the government to support households
and businesses with the cost-of-living challenge in the short term. To address the longer-term
problem of rising energy costs, the government will be making significant interventions in the
energy market over the coming months.
2.8 A new Energy Supply Taskforce will seek to negotiate long-term agreements with major gas
producers. The government is also working with electricity generators to reform the outdated
market structure where gas sets the price for all electricity – instead, the government will move
to a system where electricity prices better reflect the UK’s home-grown, cheaper and low-carbon
energy sources, which will bring down consumer bills. Successful action should smooth the price
of wholesale gas and electricity and increase security of supply over time, reducing the likelihood
of similar energy price crises in the future.
1 Energy Price Guarantee Press Release, September 2022
14 The Growth Plan 2022
2.9 The £40 billion Energy Markets Financing Scheme, delivered with the Bank of England,
will help to address extraordinary liquidity requirements faced by energy firms from high and
volatile energy prices. The scheme will provide a backstop source of additional liquidity to energy
firms in otherwise sound financial health to meet extraordinary variation margin calls. It will be
limited to those making a material contribution to the liquidity of UK energy markets and who
are thereby systematically important to the UK economy. The scheme will provide liquidity to
firms through a 100% guarantee, delivered via commercial banks and will open to applications
from 17 October. HM Treasury will convene an advisory committee as part of standing up
a robust assessment process. Firms will have to agree to a wider set of conditions before
accessing the scheme. 


2.10 To increase energy resilience, the North Sea Transition Authority will shortly launch a new
oil and gas licensing round. This is expected to deliver over 100 new licenses. The government
has also announced an end to the pause on extracting reserves of shale. The government
is driving the development of home-grown nuclear – including Small Modular Reactors
– hydrogen, Carbon Capture, Utilisation and Storage and renewable technologies. The
government will unlock the potential of onshore wind by bringing consenting in line with other
infrastructure. The UK is a world-leader in offshore wind, with 8GW of offshore wind currently
under construction. By 2023 the government is set to increase renewables capacity by 15%,
supporting the UK’s commitment to reach net zero emissions by 2050.
2.11 To make homes cheaper to heat, the government will bring forward legislation to
implement new obligations on energy suppliers to help hundreds of thousands of their
customers take action to reduce their energy bills, delivering an average saving of around £200
a year. This help will be worth £1 billion over the next three years, starting from April 2023.
Support will be targeted at those most vulnerable, but will also be available for the least efficient
homes in lower council tax bands. As with previous schemes, the government will work with the
Scottish Government on arrangements in Scotland. The government will also imminently open
applications for up to £2.1 billion over the next two years to support local authorities, housing
associations, schools and hospitals invest in energy efficiency and renewable heating.
2.12 Energy prices are the largest driver of high inflation. The energy interventions the
government has announced will support households and businesses with their energy bills. This
will reduce pressure on inflation, help people keep more of their money to spend on what they
want, and support economic activity.

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