£3,000 energy bills and further cost of living payments for vulnerable groups from April 2023

The government has confirmed that a new version of the Energy Price Guarantee (EPG) will be in place from April 2023 until April 2024. It will freeze energy bills for a household with an average or 'typical' energy use at £3,000 per year.

The EPG was due to come to an end in April 2023. It's currently set at £2,500 for a typical household's bills. While the new rates from April will be lower than they would otherwise have been without government support, they will still be more than people are paying now.

It's worth noting that as well as the £500 increase to the annual bill for a typical household, Hunt did not mention continuing with the £400 rebate that households are receiving this winter, after April 2023. 

So in practice, people are likely to find their monthly energy payments are significantly higher come April as rates will increase at the same time that the £67 monthly payments stop. We don't yet know what the new unit rates will be, so we can't predict exactly how much individual bills will be. 

As currently, the price freeze will be on the cost per single unit of energy and not the total bill. That means the more you use, the more you'll pay and the less you use the less you'll pay. 

As well as the EPG, additional cost of living payments for the most vulnerable will be distributed into next year, with £900 going to those on means-tested benefits.

Read on to find out more about how the changes to the EPG will impact your energy bills, or get all of our advice and tips on managing the cost of living crisis.

Energy Price Guarantee to cap energy bills until April 2024

An updated version of the EPG will now be in place from April 2023 until April 2024. Although it will set bills lower than the astronomical levels they would otherwise be at, the change will still mean a large bill increase for households. 

From April 2023, the government will continue to subsidise energy unit rates but customers will be paying more than they currently are. 

As an illustrative example, a household with 'typical' medium energy use that is currently paying around £2,500 a year will pay £3,000 in the year from April 2023 - April 2024.

Find out how Ofgem defines 'typical energy use' and how that compares with your own household in our guide to how to estimate your energy usage.

Find out more about how the Autumn Statement will impact your money.

More cost of living payments for the most vulnerable households

Additional cost of living payments have also been confirmed for next year. This includes a £900 payment for the households in the UK that receive means-tested benefits (paid in two lump sums). 

A further £150 payment will be made to the six million people receiving non-means-tested disability benefit.

A £300 payment will be given to pensioners receiving a Winter Fuel Payment.

We don't yet know when in 2023 the new £900 cost of living payment, or the other two payments, will be made, but expect they will be paid in the same way that cost of living payments were made this year. This was as a lump sum transferred to your bank account by either DWP or HMRC. 

You should receive the payments automatically if you are eligible.

Get more details on all the energy and cost of living payments available, how they are paid and what you can expect in our guide to everything you need to know about the government's energy and cost of living support.

Windfall tax on gas and oil companies to rise to 35% 

The new budget will see gas and oil companies have to hand over 35% of their profits on their UK operations, up from the current 25% rate. The windfall tax on oil and gas providers, also known as the energy profits levy, aims to target energy suppliers that are benefiting from something they are not responsible for. 

This will be in place until March 2028 - an extension beyond the original planned end of December 2025.

In addition, there will be a 45% tax on the profits of electricity generators, notably those that generate renewable and nuclear power and have so far seen enormous profits as the energy they generate can be sold for the global market rate - which has been inflated by the price of gas.

This set of tax changes for energy companies is set to raise £14bn in the next year alone, and contributes to the government’s measures to help customers with soaring energy bills.

The money generated through the windfall tax will be put towards funding the government’s array of measures designed to help customers afford rocketing energy payments, including the EPG, £400 discount on energy bills until April 2023 (Energy Bills Support Scheme) and additional energy payments for vulnerable groups. 

Find out more about the help available to pay your energy bills and how it will be paid to you.

Home-grown energy plans for future stability

Hunt also committed to ambitious new targets for domestic energy generation - particularly that of renewable and nuclear power - and energy efficiency in UK homes.

He said the UK needs to change its approach to energy generation and efficiency not only to protect the planet from climate change but also to protect the UK economy against the devastating impact of the volatile global prices of fossil fuels. 

He said that such investment is crucial in order to reduce energy bills for UK households and businesses in the years to come.

He confirmed that contracts will be signed in the coming weeks to build Sizewell C nuclear plant in south east England. The plant is expected to provide up to 7% of the UK's total electricity needs, and Hunt said it will generate 10,000 jobs and provide power for six million homes for 50 years.

However, it is not expected to begin generating electricity until the 2030s.

Hunt said: ‘Over the long term, there is only one way to stop ourselves being at the mercy of international gas prices: energy independence combined with energy efficiency.’

Read more on: How to make your home more energy efficient

Consumers must not be left struggling to make ends meet

Rocio Concha, Which? Director of Policy and Advocacy, said:

'Additional support for the most financially vulnerable and the new price guarantee will bring some much-needed relief to those struggling most, but it may still not be enough - particularly if bills remain this high next winter.

'It's not just those on the lowest incomes who will struggle to afford higher bills - for example, people on lower-middle incomes will just miss out on extra support and will need to find more than £1,000 extra to cover their energy costs. The government must ensure that as energy prices remain incredibly high, consumers are not left struggling to make ends meet.

'With energy bills higher than ever, the government’s announcement of further help for consumers to make their homes more energy efficient is an important step in the right direction. This support should be delivered as quickly as possible and underpinned with accessible independent advice and robust consumer protections.'

Find out more about our cost of living campaign.