Energy price cap: proposed changes to Warm Home Discount Scheme cost allowance

Details of outcome

We have decided to change the cost profile of the Warm Home Discount cost allowance in the energy price cap from 1 January 2026. 

To reflect the increased costs of the expanded Warm Home Discount scheme, we have decided to bring the remaining cost recovery associated with the WHD scheme year 2025 to 2026 expansion forward to 1 January 2026. We have also decided to extend these costs over a longer period until 31 March 2027. 

The decision document attached below sets out the rationale behind our chosen approach following the feedback we have received during the consultation.

Read the full outcome

Original consultation

We are proposing changes to the cost profile of the Warm Home Discount cost allowance in the energy price cap from 1 January 2026. This proposal follows the UK government decision to expand the Warm Home Discount Scheme half way through the financial year 2025 to 2026. This is to make sure that an extra 2.7 million eligible households get support they need to help with the cost of their energy bills. The UK government is also proposing to extend the Warm Home Discount Scheme after April 2026. 

To reflect the increased cost of the expanded scheme we are proposing to bring the remaining cost recovery associated with the financial year 2025 to 2026 expansion forward to 1 January 2026. We are also proposing to extend these costs over a longer period until 31 March 2027. 

Background

The Warm Home Discount scheme provides a £150 annual rebate on energy bills to support low-income and vulnerable households. 

There are different costs included in the energy price cap. A cost allowance to reflect the costs to suppliers of delivering the Warm Home Discount scheme is one of them. This allowance enables energy suppliers to recover the costs they incur in providing rebates to eligible customers. 

Who should respond

We would like views from people with an interest in the level of the energy price cap. We particularly want to hear from:  

• energy suppliers 
• energy consumers
• industry groups 
• consumer groups 
• charities 

Consultation document