- Suppliers paid £140 rebate to over 2.2 million vulnerable customers such as low income pensioners last winter
- Wider support also included energy efficiency measures, energy advice and writing off energy debts (1)
- All obligated suppliers complied and record numbers of rebates were provided automatically due to improved data sharing
Ofgem has today published its annual report on the Warm Home Discount (WHD) showing that vulnerable customers benefited from over £348m of support from suppliers last winter (2).
The WHD is a government scheme administered by Ofgem requiring larger and medium sized suppliers to provide support to customers living in fuel poverty.
Last winter, all 19 obligated suppliers met their scheme obligations in full. British Gas paid out the most due to having the largest number of vulnerable customers and the largest share of the obligation.
A record amount – 96% - of £140 rebates on energy accounts to low income pensioners in the “core group” were provided automatically.
This is due to improved data sharing between suppliers and the Department of Work and Pensions to identify those eligible to receive the rebate.
On Monday, the government confirmed it was extending the WHD, which had been due to expire in March next year, until 2026.
The government introduced the WHD in 2011 and since then in total suppliers have provided £2.7 billion of support to vulnerable consumers.
This figure has increased year on year, partly in line with inflation and also due to more suppliers being obliged to participate as small suppliers who are exempt grow into medium sized suppliers who are not.
Ofgem expects more customers to be eligible to receive support under the WHD this winter due to the economic and health impacts of COVID-19.
Jonathan Brearley, chief executive of Ofgem, said:
“For the last nine years, the Warm Home Discount scheme has provided a lifeline to some of the most vulnerable in our society who struggle to heat and light their homes during the winter in particular.
“Ofgem will continue to work closely with government and suppliers to ensure that consumers get the support they need in the difficult months ahead as we help to build a fairer, greener energy system.”
Kwasi Kwarteng, energy minister, said:
“The Warm Home Discount has already helped millions of vulnerable customers and through our commitment to extend the scheme in the Energy White Paper, we will continue helping those most in need with paying their energy bills.
“We have committed to extending the Warm Home Discount to 2026, and from 2022 it will already be reaching nearly three million people, providing £475 million a year for those who need it most.”
1. There are three support mechanisms within the WHD:
- Core Group support: This provides a £140 rebate on electricity or gas accounts to 1.05 million low-income pensioners who are recipients of the Pension Credit Guarantee Credit. Last winter £149.5 million was provided to these consumers.
- Broader Group support: This provides the same £140 rebate to 1.145 million other low income customers who are in or at risk of fuel poverty. These consumers, who received £161.9 million, do not receive the rebate automatically and should contact their supplier to find out if they are eligible and when they can apply.
- Industry Initiatives: These provide indirect support to help fuel-poor customers such as energy efficiency measures, energy advice and writing off energy debts. A record £37.1 million of this support was delivered last winter. Subject to Ofgem approval, suppliers can operate Industry Initiatives that include provision of energy bill debt write-off to eligible customers who are in, or at risk of, fuel poverty. To obtain this support, customers have to demonstrate they meet the requisite eligibility criteria and can demonstrate an outstanding energy debt.
2. The last WHD period ran from 01 April 2019 to 31 March 2020. Suppliers typically pay WHD rebates between September and February.
3. Last year, any licensed supplier with at least 250,000 domestic customers for gas and electricity was obligated to participate in the WHD scheme. In addition, any licenced supplier with at least 200,000 domestic customers for gas and electricity was obligated to deliver the Core Group only. The WHD scheme has continued to expand to new suppliers as the domestic energy market diversifies. For the current year, 25 are participating, the highest number of suppliers participating since the scheme began in 2011. A full list of obligations and requirements on suppliers to support and take part in the WHD can be viewed on our website.
4. The WHD scheme is funded by licensed suppliers, and the cost is passed on to consumers through energy bills. Ofgem’s administration of the scheme is funded by the government.