2025 Budget £150 energy bill discount

Morning ​@Firedog, thanks for posting.

We’re not sure as of yet, but will be sure to update you as soon as we have any news on this.

And now we learn that some of the effect of the budget reduction on our bills is going to be offset (clawed back) to fund upgrading the distribution networks:

From the BBC:
Energy grid investment of £28bn to push up household bills

The Ofgem Press Release:
Ofgem unlocks £28 billion investment to maintain a safe, secure and resilient energy grid and to upgrade and expand capacity to meet growing demands

In total £108 will be added to bills by 2031. £48 for gas and £60 for electricity. Alongside maintaining grid resilience this investment will deliver significant savings of around £80 compared to not expanding the grid.

Electricity grid expansion alone is expected to reduce bills by £50 by 2031, thanks to lower reliance on imported gas and the halting of constraint costs ensuring power flows efficiently from where it’s generated to where it’s needed, even at peak demand. In short, investing now is cheaper for consumers than delaying, and electricity grid investment more than pays for itself.

Overall the net increase in bills to cover all costs by 2031 will be around £30 or less than £3 per month with costs expected to fall further over time.

Jam tomorrow then.

No, I didn’t think you would be - it will take time to work out how best to do this. I’m wondering:

• Will Ofgem impose a solution?
• Or will some|all suppliers collaborate to find a solution?
• Will customers be invited to make suggestions?

There is a slightly awkward question about whether the reduction should apply to those on fixed-rate tariffs or not. After all, some of us fixed our rates this year in order to avoid increases in standing charges that we suspected were on the way as policy costs rose - as I wrote nine months ago, “I’m still hoping to avoid the 4-5p/day increase in the standing charge that the proposed expansion of the Warm Home Discount scheme could cost from 2025Q3. And, of course, any other increases Ofgem may dream up.” 

If fixed-rate customers are immune from policy cost increases, can they legitimately expect to benefit from policy cost cuts?
  

PS The SC increase to pay for the expanded WHD scheme turned out to be 4.7p/day:
  

It’ll be interesting to see what happens. So far what’s been announced by the Chancellor has been re-iterated to us internally, but without any details as of yet for how the £150 saving will actually look.

We’ll let you know when we know any further news on this that we can chare with customers.

This article from Martin Lewis regarding his conversation with Ed Milliband has the view that it should apply to all customers 

I wouldn't be so hasty about expecting a long term decrease in your fuel bills.

The government moved the ECO costs to general taxation, decreasing fuels bills but the Ofgem RIIO-3 final determinations (Revenues = Incentives + Innovation + Outputs) which come into effect in April 2026 is set to increase electricity bills by a similar amount. This increase is to pay for extra transmission links across the Scottish border so that wind power generated can be brought south instead of being constrained (which we pay double for) and for the new nuclear projects like Sizewell C and increases to transmission costs (TNUoS) are accounted for.

https://www.ofgem.gov.uk/decision/riio-3-final-determinations-electricity-transmission-gas-distribution-and-gas-transmission-sectors

There is better news for those who use gas as the upcoming glut of LNG (from the US, Middle East and other emerging sources) has caused the prices to drop this winter (usually they increase due to demand) and drop even lower on the Futures market for this summer. A good tariff to be looking at is a Tracker. 

Peter

Yes, but this approach is really questionable. Suppliers have in the past couple of years seen staggering increases in the policy costs the exchequer requires them to pay, so of course they have to pass them on to customers:
  

Rows with no Scheme label are my own calculations. The bottom line indicates how the total cost applies to the typical household consuming 2700 kWh of electricity per year. Over the past twelve months, it has risen by £87. It is up to suppliers how they allocate costs to unit rates and standing charges, although the price cap limits the standing charges they’re allowed to levy for those on Standard Variable Tariffs (like OVO’s ‘Simpler energy’).  

Fixing rates for a period protects customers from rising costs during that period, including policy costs (= taxes). It also renders them liable to missing out should costs fall - that’s the gamble we take. Mr Milliband’s exhortation drags the future of fixed rates into doubt; we have already seen that Scottish Power have introduced a ‘partial fix’, where the cost is fixed with regard to changing wholesale costs, but moves up or down with the other costs.