In September we looked at the Energy Bill Support Scheme (EBSS), and how payments are being made through the scheme to help with energy costs between October 2022 and March 2023.
The package of support for all eligible UK households is providing £400 to help offset energy price increases, with the discount being supplied monthly, regardless of the frequency of customer payments.
Questions have been asked of how payments made through the scheme are passed on to tenants who pay for their energy usage through their rent to their landlord.
Do you pay your landlord for your energy supply? Is electricity and gas included in the amount you pay for rent?
Any ‘intermediaries’ (the landlord as the middleman) who receives support from the EBSS, EBRS or EPG schemes must ensure that they pass on that benefit to end users (in most cases the tenant) in a way that is ‘just and reasonable’.
Who count as an ‘intermediaries’?
Relevant ‘Intermediaries’ are any individual or organisation that hold an electricity and / or gas contract and passed on the costs of the energy supplier under this contract to an end user of the energy supplied.
One example of an intermediary would be a landlord, where the tenant pays their energy cost as part of their rent.
This also covers intermediaries supplying a product or service where contractually a part of the price related directly to the cost of electricity and / or gas.
This includes, but is not limited to:
- landlords
- sublets
- student accommodation managers
- social housing providers
- local authorities (for council housing)
- site owners (for park homes)
- site managers
- marinas if using shore power (for boat homes)
- combined heat and power operators
- electric vehicle charging operators
- other residential building managers
It is possible for intermediary to also be an end user. For example, a landlord who owns a block of flats and lives in one of them will be both an end user and intermediary to the tenants of the other flats.
Any person who falls under this definition must consider their obligations to pass on the benefits of the relevant schemes.
What does the term ‘just and reasonable way’ mean?
Intermediaries must pass on the discount regardless of how the end user pays for their energy use.
They can adjust the amount they pass on based on their charges to end users and must demonstrate to end users that this amount is just and reasonable.
Intermediaries can take into account the extent to which they have increased their charges to end users as a result of the energy crisis. For example, if the intermediary has shielded its end users from the impact of increased energy prices it may be just and reasonable for it to retain some or all of the scheme benefit.
What benefit can be passed on?
The type of benefit that is passed on is dependent on the way the intermediary pays for their energy.
Domestic contracts
If the intermediary has a domestic contract with a supplier, they will receive the Energy price guarantee (EPG) and the Energy bill support scheme (EBSS)
They should pass this benefit onto their end users and ensure that any automatic tariffs (such as from a coin meter) are set in line with the EPG rates. If the landlord has protected their tenants from some of the energy price rises, they may be able to retain some of the benefit.
Business contracts
If the landlord has a business contract, they will not receive EBSS payment, but will receive the Energy Bill Relief Scheme (EBRS). In this case the end user will not get the EBSS payment but should have any benefit from the EBRS scheme passed onto them by their landlord/intermediary.
Heat Networks
It is the responsibility of the heat supplier to notify each of its consumers in writing that the heat supplier has been provided with a benefit under the EBRS.
The notice must be given to consumers by the later of these two deadlines:
- 1st December 2022
- Within 30 days of the EBRS benefit being provided to the heat supplier.
The Regulations require a heat supplier to provide either the full benefit it receives from the EBRS, or if less than the full benefit, a just and reasonable pass-through amount calculated in accordance with the Regulations
The heat supplier must provide consumers with evidence showing what factors it has taken into account in determining that the pass-through amount was just and reasonable. The factors which a heat supplier can take into account are:
- the amount which the heat supplier paid for the energy which was subject to price reductions under the EBRS;
- any other costs which the heat supplier incurred in supplying heating and hot water during the period it benefits from the EBRS. This includes costs from distributional heat losses, efficiency of generation, operational, maintenance, and capital costs, and set-up and operation costs of effecting the EBRS pass-through;
any losses which the heat supplier has incurred as a result of the cost of purchasing energy exceeding the amount charged to consumers for the supply of heating and hot water during the period for which the scheme benefit was provided (the EBRS will apply to existing fixed price contracts that were agreed on or after 1 December 2021). For example, heat suppliers with ‘price promises’ to their consumers may have incurred losses from absorbing higher wholesale energy costs whilst holding prices for consumers down. A heat supplier can factor these losses into determining a pass-through amount.
In addition, the Regulations specify that a pass-through amount is just and reasonable if it is calculated on the same basis used by the heat supplier when calculating charges to the consumer when it was provided with the EBRS benefit. Specifically, if when it was provided with the scheme benefit, the heat supplier was calculating the price of heat charged to the consumer based on:
- the consumer’s heating and hot water consumption; or
- an amount which represents a proportion of the cost incurred by the heat supplier when purchasing the energy needed to supply heating and hot water
the heat supplier’s calculation of the pass-through amount for each consumer must reflect this approach.
What can we do if we haven’t had the payment passed on to us?
The first thing you should do is to speak to your landlord to see what the situation is. They should be able to tell you how EBSS payments are being passed on to you.
The team at energyadvice.scot can provide more information on your next steps, or if you are still awaiting on EBSS payments from previous month(s). Call 0808 196 8660 (Monday to Friday, 9am-5pm) or speak to the team online.