ALL domestic energy customers will receive a £200 energy rebate this October to help cope with rising bills.
The support will need to be repaid from April 2023 but many are questioning if it is possible to opt out now so they aren’t saddled with the extra debt next year.
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Millions of households are already trying to cope with rising inflation and are now set for energy bill increases
Energy regulator Ofgem announced last week that the price cap on gas and electricity bills, which is meant to protect 22million out-of-contract households, will go up in April by almost £700 to £1,971.
It comes as suppliers struggle with rising wholesale gas prices, which has led to small providers closing and a lack of competition in the market.
Households currently can’t even make a saving by switching energy provider due to a lack of competitive deals.
The government unveiled a spate of measures last week to help households with the rising cost of living and the energy market crisis.
This includes a £200 energy bill rebate to help soften the blow of the price cap rise.
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The money will be given by the Treasury to energy suppliers who will then cut everyone’s bill by £200 from October 2022.
The government still needs to consult on how this scheme will work but the discount will come as either a reduction on your payments or as credit on your account.
Pre-payment meter customers may get a voucher.
This rebate isn’t free money though and needs to be repaid.
Everyone will have to repay this automatically from April 2023 with £40 automatically taken off their accounts each year for five years.
Some have questioned the fairness of this and said it is not right that they are being saddled with extra charges in the future.
A Twitter poll by MoneySavingExpert Martin Lewis this week found that 80% of 40,000 respondents would opt-out of the rebate.
One Twitter user said: “I don’t want debt hanging around my neck when there is no guarantee bills will go down during the repayment period.
“I would rather make further cuts to usage/budget than face extra costs down the road.”
Mr Lewis highlighted examples where some people could lose out from this rebate in his latest MoneySavingExpert newsletter.
He said five people in a shared house would get the £200 discount on their bill in October 2022 but if they then each move out and live alone from April 2023 they will be left repaying £40 each per year on a deal they didn’t benefit from.
Chancellor Rishi Sunak has, however, confirmed that it is not possible to opt-out.
He told the Martin Lewis Money Show last week: “You shouldn’t view it as debt, it’s £200 off your bill, there’s no interest charged on that.
“The £200 you’ve got you put that aside and probably make a little bit of money.”
Households will have to wait for the government consultation on the rebate this spring to see if their concerns are addressed.
What help is available if you can’t pay your bills?
You don’t have to wait until October for energy bill support.
There is more help available if you are struggling with energy bills.
Speak to your supplier directly first if you are struggling to pay your bill or are worried about falling behind.
Many suppliers run their own support schemes.
British Gas Energy Trust, for example, runs a scheme where anyone can apply for a grant, and you don’t even have to be a customer.
Pension credit and other benefit claimants may be eligible for the Warm Home Discount – which gives you £140 off energy bills.
People on certain benefits can also get Cold Weather Payments of £25 a year when the temperature drops.
It is also worth checking with your local council for household support grants.
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