What is the Warm Home Discount Scheme and what does it mean for energy suppliers?
With news that several energy suppliers have opened their registrations for their Warm Home Discount schemes early, we take a look at what exactly the scheme is and what energy suppliers have to do to enact it.
What is the Warm Home Discount Scheme?
The Warm Home Discount Scheme is a government scheme that grants a £140 discount on the electricity bills of low-income households.
Participating energy suppliers administer the one-off discount by taking it off of the household’s energy bills.
The reduction is often applied between September and March. Customers on prepay meters are also eligible for the discount.
There are two groups eligible for the Warm Home Discount. These are:
The core group – This group includes pensioners who receive the Guarantee Credit part of the Pension Credit, and they should be notified by the Department for Work and Pensions about their eligibility to the scheme by the end of December. This group typically does not have to apply for the Discount as it is automatically taken off their energy bill.
The broader group – This group covers those customers who are living in or at risk of fuel poverty. The eligibility criteria for this group is set by the government but energy suppliers are also allowed to use their own discretion.
An eligible applicant should be able to prove that they are the recipient of a state benefit and will need to provide evidence that their household income is less than £16,000 per annum. Other factors a supplier must consider include:
- Does the household have a child under the age of five permanently living there?
- Does someone in the household receive Disability Living Allowance, Incapacity Benefit, Personal Independence Payments or Attendance Allowance?
An energy supplier should already know what customers are likely to be eligible thanks to utilising the Priority Services Register (PSR).
Customers on the PSR are eligible for several free services such as receiving advance notice of any planned power cuts, priority support in the event of an emergency and an identification scheme to reassure customers that callers and meter readers from their suppliers are genuine.
Also read: Add your Customers to the Priority Service Register with Dyball’s CRM
Do Energy Suppliers have to participate?
Not all energy suppliers participate in the scheme. Companies that have less than 150,000 domestic customer accounts are exempt. If a supplier has more than 150,000 customers, however, then they are required to take part and provide rebates to the Core Group.
Energy suppliers with more than 250,000 customer accounts are required to deliver rebates to both groups.
The scheme in combination with other financial support for customers can cost the largest energy suppliers as much as £40 million.
When the Warm Homes Discount was first introduced only those companies who were part of the ‘Big Six’ had to take part but as the energy supply market grows increasingly competitive there are now more than 20 suppliers participating.
In the 2020/21 scheme for example, there were 23 suppliers obligated to take part with 2 suppliers participating on a voluntary basis.
Suppliers need to ensure that the process for customers to apply for the scheme is as easy as possible and should inform their most vulnerable customers that the scheme is open to applications.
Those in the broad group have to apply every year to participate in the scheme so suppliers need to ensure that they have the staff, training, and systems in place to ensure the process is as quick and easy as possible.
With Ofgem’s energy price cap to rise to a new record high this October the Warm Homes Discount scheme will no doubt become more important than ever for many customers.
Dyball Associates will keep you informed of the latest industry changes and our team of energy market consultants can guide you through the steps to enter the UK energy market. Whether you’re looking for electricity and gas software systems or support on starting an energy supply company, Dyball Associates can help.
Further Reading
How long does it take to switch energy supplier and how can suppliers ensure they make them quickly?
Energy Suppliers, are you ready for the Green Gas Support Scheme and Green Gas Levy?
Dyball Associates are proud to help new supply businesses successfully launch in the UK market.
Through our energy market consultancy services, and the software we’ve developed, we’re supporting new UK electricity and gas suppliers get set up and start supplying.
For more information on how to start and manage an energy company, get in touch with Dyball Associates today.
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