Guidance

Schemes for providing support for energy costs

Published 4 November 2026

Factsheet relating to the Energy Independence Bill.

Summary

This measure gives the government stronger and more flexible powers to support households with the cost of energy. It allows the Secretary of State to create schemes that deliver direct help to households, and which can be more responsive to spikes in energy prices from global events. The measure ensures support can reach a wider group of households than is possible under existing powers, while continuing to protect those most at risk of high energy costs. It also improves resilience to energy price volatility and helps make energy more affordable for all.

Why are we legislating?

While energy prices are now lower than during the crisis of 2021 to 2023, a broader group of households struggles with high energy costs than government programmes can currently support. While the government can support consumers in fuel poverty using existing powers under the Energy Act 2010, ‘fuel poverty’ has a statutory definition. This limits the households who can be eligible for support. These new powers will allow the government to make schemes that better reflect real-world affordability challenges.

One of the biggest practical barriers to targeting support to households who most need it is the availability of the right data. The Fuel Poverty Strategy for England contained a commitment to expand data matching to be better able to reach and support households.^{[footnote 1]} The government announced an energy bill support ‘kickstarter’ project as part of the work of the National Data Library to join up public sector data and improve the ability to identify eligible households.^{[footnote 2]} These powers are crucial for being able to make use of new data-driven approaches to targeting households.

Future volatility in oil and gas prices cannot be ruled out, as shown by the current crisis in the Middle East, which affect our energy prices at home. This legislation provides a clearer and more flexible legal framework for delivering energy bill support during crises. This is intended to avoid the need for emergency time-limited legislation, such as the Energy Prices Act 2022, during a future crisis, enabling more rapid delivery of support in such circumstances.

What are the government’s objectives with this measure?

This measure contributes directly to the core objective of delivering a fairer deal for consumers. By enabling better targeted energy bill support, the government can protect households from high costs while ensuring value for money for all bill payers.

This measure will provide a clear and enduring legislative basis for energy bills support. The principal aim is to be able to reach more households facing affordability challenges than we can support under current powers and also provide universal support when needed. This robust framework can be used both for long-term targeted support and for rapid action during an energy crisis. The powers will also enable support schemes to be designed to reflect different household circumstances and energy use patterns.

How will this measure deliver the objectives?

The measure gives the Secretary of State powers to create and amend energy bill support schemes through secondary legislation. The legislation allows for a wide range of support to be provided, including bill discounts, reductions in unit rates or standing charges, debt relief on energy accounts, direct financial payments where bill credits are not possible, and energy related goods and services such as energy efficiency support and advice. This flexibility means schemes can be tailored to different needs or circumstances and combined where appropriate.

The measure also enables flexible funding arrangements, including in how suppliers can recover the costs of schemes. The aim is to ensure that the costs of a scheme are proportionate and lower-income and vulnerable consumers can be protected, at the same time as ensuring energy suppliers can fully recover their costs. Provisions for reimbursement and reconciliation mechanisms help ensure suppliers are not unfairly disadvantaged, supporting effective delivery and competition.

Together, these powers ensure support can be targeted, fair, and responsive, helping households manage costs while strengthening resilience to future energy price shocks.

1. DESNZ (2026) ‘Fuel Poverty Strategy for England’ ↩

2. DSIT (2026) ‘National Data Library: progress update, January 2026’ ↩