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Warm Home Discount

Warm Home Discount

The Warm Home Discount (WHD) is a UK Government initiative to help low income and vulnerable households with energy costs. The scheme was worth up to £1.13 billion over the four year period that rran from April 2011 to March 2015.  It aimed to help around 2 million low income and vulnerable households in Great Britain annually.

The Department of Energy and Climate Change (DECC) is responsible for the Warm Home Discount policy and legislation. Ofgem’s role was to administer the scheme and to monitor the energy suppliers’ compliance with their obligations under Warm Home Discount.

However, the funding came from the participating energy suppliers. The UK Government has committed to additional spending of £320 million on the Warm Home Discount Scheme in 2015-16.

Amendments came into force 12 March 2015 after the Government consulted on ways to make the scheme more effective. Core group eligibility criteria was retained but compulsory standard criteria was introduced for the broader group. In addition, a provision of a rebate to eligible park home residents as well as additional groups of customers who may be at particular risk of living in fuel poverty was included in the list of approved Industry Initiatives activities.

There are four elements to the scheme:

  • Core Group

Support is targeted at the households of less well-off pensioners.  Vulnerable customers identified by a data-matching process with the Department for Work and Pensions receive an automatic annual rebate on their electricity bill.  For Winter 2015-16 the discount will be £140.

  • Broader Group

In addition to the Core Group, suppliers are required to provide an annual rebate to a wider group of customers who are fuel poor or in a group at risk of fuel poverty. Eligibility for these customers is set by suppliers themselves, but approved by Ofgem under the Warm Home Discount regulations.

  • Legacy Spending

Suppliers have the option to continue to offer discounted/social tariffs or rebates to vulnerable customers who benefited from these initiatives under the previous Voluntary Agreement.  This area of the Warm Home Discount is expected to diminish over the lifetime of the obligation.

  • Industry Initiatives

The Industry Initiative element enables suppliers to provide assistance, beyond direct financial support, to customers in fuel poverty or at risk of fuel poverty.

The Warm Home Discount only applies to electricity accounts, so if customers use different suppliers for their electricity and gas, they should only contact their electricity provider for this scheme.

Warm Home Discount Scheme in Scotland

With the publication of the Smith Commission report, additional powers to determine how supplier obligations in relation to energy efficiency and fuel poverty, such as the Warm Home Discount, are designed and implemented in Scotland are expected to be devolved. Responsibility for setting the way the money is raised (the scale, costs and apportionment of the obligations as well as the obligated parties) will remain reserved.

The clauses will transfer executive competence to Scottish Ministers to empower them to design and implement supplier obligations in Scotland. This is achieved through amendments to the Gas Act 1986, Electricity Act 1989 and Energy Act 2010 (the 2010 Act). This new legislation is expected to come into force after the General Election 2015.

Reporting

For a review of progress see:

Warm Home Discount Scheme Annual Report: Scheme Year 3

Warm Home Discount Scheme Annual Report: Scheme Year 2

Warm Home Discount Scheme Annual Report: Scheme Year 1

For More Information

GOV.uk - DECC

WHD Website - Ofgem