Millions of households could see an annual saving of £39 on their energy bills due to proposed changes in the funding of the Warm Home Discount scheme. The government is seeking feedback on a plan to shift the funding source from the standing charge to the unit rate, particularly benefiting low-income households that use less energy. The consultation period for this proposal ends on January 6.
Renowned consumer advocate Martin Lewis praised the initiative, stating it is a step in the right direction. The Warm Home Discount program, run by the government, provides a one-time £150 discount on electricity bills to eligible low-income and vulnerable households during winter. The scheme has been expanded to include an estimated total of six million households for the upcoming winter season.
Under the current system, suppliers recover costs through the standing charge, a fixed daily fee applied to all customers regardless of energy consumption. The proposed change would transfer these costs to the unit rate, the per-kilowatt charge for electricity and gas, starting from April next year.
While most households, including 60% of low-income ones with low energy usage, would benefit from this shift, high energy users, such as those charging electric cars at home, may face higher costs. Additionally, the government’s promised £150 annual saving on average energy bills is set to take effect. This saving is part of measures announced in the Budget to eliminate the Energy Company Obligation and fund the Renewables Obligation through general taxation.
According to the government’s consultation, approximately 16.5 million households, including 2.8 million low-income households, will benefit from the change, while 12 million households may experience negative impacts. When factoring in the Budget measures, households are projected to be £138 better off annually.