UK households in remote area to get extra £60 off energy bills

Adam Scorer calls for 'targeted financial support' on energy bills

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The average savings of £60 per household will be paid in addition to other UK Government cost of living support, such as the Energy Price Guarantee and Energy Bill Support Scheme. Electricity distribution is more expensive in the north of Scotland because of its unique geography.

The extra help will come through the Hydro Benefit Replacement Scheme (HBRS) and the Common Tariff Obligation (CTO), which are automatically deducted from bills.

The HBRS was set up in April 2005 to provide a cross subsidy to reduce distribution charges in the area.

All licensed electricity suppliers are charged to help fund the scheme, costing £1 per household.

The CTO prevents electricity suppliers from charging comparable domestic consumers different prices based on their location within the region.

UK Government Minister for Energy and Climate, Graham Stuart, said the two schemes had been improved to minimise funding charges.

He explained: “The UK Government is determined to protect energy users wherever we can and to ensure fairness when it comes to energy prices across the Union.

“Therefore we are reaffirming our commitment to the Hydro Benefit Replacement Scheme and Common Tariff Obligation, which are vital tools for easing energy costs for those living in rural areas of the North of Scotland.

“Technical improvements are being brought forward. This will mean that funding charges are minimised without reducing assistance being offered.”

The upcoming improvements include:

  • Removing a distortion which permitted some suppliers to avoid charges at the expense of others
  • Changing support for inflation using the Consumer Prices Index including owner occupiers’ housing costs rather than the Retail Price Index, as the former is deemed a better measure
  • Clarifying an ambiguity that could be interpreted as requiring funding to be recovered twice-over from electricity suppliers.

UK law requires the HBRS and CTO to be reviewed every three years. The latest review included a public consultation, outlining the technical improvements.

Most respondents supported a proposal to retain the scheme as they are. Ministers will now publish a response to the consultation.

Secondary legislation will be brought forward to implement the improvements with a view for them to come into force on February 6, 2023.

The Energy Price Guarantee caps the unit price of energy to keep down energy bills for UK households, with average bills in Great Britain at around £2,500 a year.

This will go up in April, when average bills will increase to around £3,000 a year, with the policy to last for another year from then.

The Energy Bills Support Scheme is providing all households in Great Britain with £400 off their energy bills.

Consumers are receiving the discount in monthly instalments over six months, with two £66 instalments from October and November 2022 and four £67 instalments from December 2022 to March 2023.

People in Northern Ireland have this week started to receive a £600 one-off payment, including the £400 discount, over the coming weeks.

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