Energy price cap: proposed changes to methodology to recover Warm Home Discount costs

Details of outcome

We have reviewed the Department for Energy Security and Net Zero's (DESNZ) proposed changes to the Warm Home Discount scheme and considered how it will affect the price cap methodology.

After considering responses to our consultation, we have decided to update the price cap methodology. This means that Warm Home Discount costs will be recovered in line with DESNZ’s new approach to move costs from the standing charge to the unit rate. These changes will be included in the price cap from 1 April 2026.

View the policy cost allowance methodology and default tariff cap level for 1 April to 30 June 2026.

Read the full outcome

Please note that the Excel file 'Annex 4 – Policy cost allowance methodology' attached below is not fully accessible. If you require an alternative format, please contact retailpriceregulation@ofgem.gov.uk.

DESNZ have published the outcome of their consultation on Warm Home Discount cost recovery. 

Original consultation

The Department for Energy Security and Net Zero (DESNZ) are currently consulting on their proposal to move Warm Home Discount (WHD) scheme costs to the unit rate from April 2026 onwards. 

We are seeking views on the consequential changes that would need to be made to the energy price cap methodology if DESNZ decide to proceed with their proposals. 

If the department decide not to move the WHD costs from the standing charge to the unit rate, the current energy price cap methodology will remain the same. 

If the department proceeds with their proposal, we intend for the outcome of this consultation to be in place from 1 April 2026 onwards. 

Who should respond 

We would like views from people with an interest in the energy price cap (default tariff cap) level. We particularly welcome responses from: 

• energy suppliers
• other interested industry parties
• consumer groups
• charities
• energy bill payers 

Consultation documents 

Please note that the Excel files attached below are not fully accessible. If you require an alternative format, please contact retailpriceregulation@ofgem.gov.uk.