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£200 energy bill loan and Warm Home Discount Scheme

By 28/03/2022July 1st, 2022Blog

The energy bill price cap is set to rise this week. On April the 1st, the price cap, set by Ofgem (the government body responsible for energy markets), will rise by 54%, resulting in a hike in prices to close to £2000 for some households. If you are worried about rising fuel prices, then we have some good news; the UK government are providing a number of schemes to help households pay the new rates. This guide will run you through two of these schemes: the £200 Energy Bill Loan and the Warm Home Discount Scheme.

What is the Energy bill Price Cap?


Money Rising

Ofgem is the non-ministerial government body in charge of regulating the energy market. The Energy Price Cap is one of the instruments they use to ensure that the market is fair for all and that energy companies aren’t scalping clients with high prices. The price cap sets a limit on the amount your energy supplier can charge per unit of gas and electricity and also limits the daily standing charges they can apply. This price cap is adjusted twice a year, in April and October, to allow for inflation and shifting markets. On the 3rd of February this year, it was announced that the price cap would rise by £693 in April, an increase of 54%. The Chancellor, Rishi Sunak, has stated that the previous cap was set ‘artificially low’ and prevented energy suppliers from providing an adequate service. Experts are predicting another 29% hike in October. Unfortunately, this does mean that energy and heating bills are set to rise significantly over the coming year.

The £200 Energy Bill Loan

On the same day as the energy price cap increase was announced, the government also announced a new scheme to help everybody cover the rising costs of heating our homes; the £200 Energy Bill Loan. There is a lot of confusion about exactly what this loan is and how it will work; hopefully, we should be able to clear a few things up.

man holding money

The loan is not optional and will be applied to all eligible energy bills across the UK this coming October. Every bill will be discounted a fixed £200 to be paid back over the following 5 years. This means your bill in October will be £200 less than you would expect to pay, including the new hike in prices. Every single household that receives a gas and electricity bill will receive the discount, there is no way to opt out of the scheme. If you have a prepay meter, your smart meter may be automatically credited with the amount in October, or you may receive redeemable vouchers.   

This is not a personal loan attached to any single person or home. Instead, the loan will then be paid back by adding an additional £40 annually to every bill payer in the country for 5 years, starting in 2023. This means that bill payers registered after 2022 will be paying back the loan without receiving the £200 discount. The idea is to help everybody absorb the shock of this year’s price hike by dividing the cost over the next 5 years. Without a doubt, the £200 will be a relief to many households this coming winter, and as long as prices settle again over the coming years, the annual £40 repayments should be easily absorbed by bill payers.

Warm Home Discount Scheme 

The Warm Home Discount Scheme is an established government scheme designed to help families on low incomes cover the costs of heating their homes. For winter 2021-2022, it offers a one off discount of £140 available to households that qualify for the scheme. This discount will be available from October 2021 to the 31st March 2022. 

There are two ways you may qualify for the scheme:

  • If you receive a guarantee or savings credit element as part of your Pension Credit, or
  • If you have a low income and match your energy supplier’s criteria (based on which means tested benefits you receive). 

If you qualify for the scheme via your Pension Credit, you should have already received a letter in October outlining the scheme and how it applies to you. The discount should then be provided automatically; under normal circumstances, you will not have to take action. This discount will not affect your Winter Fuel Payment or Cold Weather Payment. 

If you are on a low income there are a number of criteria that may mean you are eligible for the scheme:

  • If you receive income support and are responsible for a child under the age of 5
  • If you receive state pension credit
  • If you receive child tax credit and are responsible for a child under the age of five.

If you think you qualify for the scheme it may be a good idea to call your energy supplier and ask them for help applying, they will usually be happy to help. You may qualify for the scheme even if you heat your home with a prepaid meter as the discount can be provided in the form of vouchers.

Heating your home

The Warm Home Discount is funded by the energy suppliers even though it is mandated by the government. All suppliers with over 250,000 clients are legally required to provide the discount for all households that qualify under the legislation. Things can be more complicated if you have recently switched suppliers, however, if you qualify and are with an energy provider that is part of the scheme (listed here) then you should receive the discount. 

The discount is available until 31st March 2022 but if you qualify for the scheme and paid bills to an eligible supplier this winter you might be able to apply for a rebate. It is also a good idea to be aware that the scheme will most likely return for Winter 2022-2023 and be ready to apply again in October. If you have any questions regarding the scheme and whether you qualify for it then call your energy supplier or this government hotline: 0800 731 0214.

Heat your home efficiently

With prices rising it is important to make sure you have an up-to-date central heating system in your home. CRB Boilers offer 0% finance options on new installations so you can upgrade your boiler, heat your home more efficiently and manage the payment over the next few years.