Government announces rise in the Alternative Fuel Payment

In the Autumn Budget, the Chancellor announced an increase in the Alternative Fuel Payment as part of a plan to tackle the rise in the cost of living. This fixed payment will rise from £100 as originally announced in October to £200 for domestic users, while non-domestic customers will receive £150 with an additional top-up offered for those that have high usage, based on actual usage.

The Alternative Fuel Payment will apply to off-grid properties that use alternative fuels, such as heating oil, liquified petroleum gas, coal or biomass for heating. Although timings for the payment distribution have not yet been announced, the government has said it will make the payment “as soon as possible this winter”.

The UK and Ireland Fuel Distributors Association (UKIFDA), our trade association, has been working with the government to help advise on the most effective and immediate way to administer the funds to heating oil users. This is because there are differences in the structure of the heating oil market compared with that for gas and electricity.

It has now been confirmed by government that the £200 payment is likely to be delivered through customers’ electricity bills rather than via fuel distributors, under a similar delivery model to the Energy Bills Support Scheme. 

Update (1st Dec 2022):

A Department for Business Energy and Industrial Strategy minister has confirmed to MPs that the Domestic Alternative Fuel Payment of £200 will be made in the New Year. The expected payment mechanism for most customers continues to be through their electricity bills with additional information expected shortly. Now there is additional clarity on timing, we continue to strongly advise customers to purchase their heating oil as usual ahead of cold weather.