The Department for Energy Security and Net Zero (DESNZ) consulted between 8 December 2025 and 6 January 2026 on moving Warm Home Discount cost recovery from the fixed standing charge to the unit rate, to align contributions to a household's actual energy consumption1. The consultation closed on 6 January 2026 and received 778 responses1. In its published response, the government set out its position that energy suppliers should recover Warm Home Discount costs from the unit rate for electricity and gas from 1 April 20261.
Responses came overwhelmingly from individuals. The breakdown was:
| Respondent type | Responses | Proportion |
|---|---|---|
| Individuals | 733 | 94.2% |
| Consumer, charity and advocacy groups | 19 | 2.4% |
| Energy suppliers | 9 | 1.2% |
| Other | 17 | 2.2% |
| Total | 778 | 100% |
On the question of whether respondents supported moving Warm Home Discount costs to the unit rate, 683 answered yes and 91 answered no, a sub-total of 7741. Individual respondents split 658 in favour and 74 against; consumer, charity and advocacy groups split 14 in favour and 3 against; energy suppliers split 4 in favour and 4 against; and other respondents split 7 in favour and 10 against1.
The government said recovering costs through unit rates is a more progressive approach to funding the scheme and responds to the fairness concerns raised about standing charges in response to the consultation1. It also said that at the current time it has no plans to move Warm Home Discount costs to general taxation1, a point raised by a sizeable number of respondents across all respondent types who argued the scheme should be funded wholly or partly through general taxation1.
"the government's position is that energy suppliers should recover Warm Home Discount costs from the unit rate for electricity and gas from 1 April 2026."
The government acknowledged concerns about impacts on some vulnerable groups, including those with unavoidably high energy needs and those with electric storage heaters1. It said the policies announced at Budget 2025 will remove an average of £150 of costs from household energy bills from April 20261, including ending the Energy Company Obligation and funding 75% of the domestic cost of the legacy Renewables Obligation for three years1. It gave the example of a gas heated house with high demand due to medical needs, which could see its annual energy bill increase by around £29 under the move to the unit rate in isolation, but is expected to see approximately £195 net costs removed when the wider Budget 2025 measures are accounted for1. A high usage electric heated household is expected to see approximately £395 of costs removed when both measures are taken together1.
On supplier arrangements, the government said a large majority of energy suppliers said they would reflect Warm Home Discount as a pence per kilowatt hour uplift on default Standard Variable Tariffs aligned to Ofgem's allowance if recovery moved to the unit rate1. It will update how the supplier reconciliation process is conducted so that supplier obligations are settled against actual energy volumes supplied, and will introduce an industry wide feedback loop so that any aggregate under- or over-recovery owing to differences between forecast and actual demand in one scheme year is corrected in the following year1. The government said it will implement the annual volume-based reconciliation with an industry feedback loop as consulted on, also continuing with the earlier interim reconciliation implemented in 2025-261. It said it was not persuaded that delaying implementation or establishing a reserve fund would be proportionate1.
Why it matters for households
The Warm Home Discount is a rebate applied to eligible households' electricity bills, and how its costs are recovered affects every household's bill, not only those receiving the rebate. Moving recovery from the standing charge to the unit rate shifts the cost of the scheme from a fixed daily charge to a charge per kilowatt hour used. For a household with low consumption, that means a smaller share of the scheme's cost sits in the fixed part of the bill; for a household with high consumption, a larger share does. The government's stated aim is to link contributions more closely to actual energy use1.
The practical effect on a given home depends on its consumption and on the wider bill changes announced at Budget 2025, which the government says remove an average of £150 of costs from household energy bills from April 20261. The government's own examples show high-usage households, including those with electric heating, seeing net reductions once those wider measures are counted, even though the unit rate change in isolation would raise their costs1. Households with unavoidably high energy needs, such as those relying on medical equipment, were among the groups whose concerns the government acknowledged1. The government has not reported a figure for the effect on a typical low-usage household from the unit rate change in isolation.
The change also affects how the scheme is administered. Suppliers settling obligations against actual volumes, with an annual feedback loop, is intended to manage the risk that recovery does not match demand in a given year1. The government said it has no plans at the current time to move Warm Home Discount costs to general taxation1, so the scheme continues to be funded through energy bills.
What happens next
The government's intention is that the change to recover Warm Home Discount costs through the unit rate will take effect from 1 April 2026, subject to changes to the price cap methodology that Ofgem has consulted on separately1. To deliver this, and subject to parliamentary approval, DESNZ will later this year carry out the necessary re-enactment and associated amendments to the Warm Home Discount (Reconciliation) Regulations 2022, by issue of the Warm Home Discount (Reconciliation) Regulations 20261. DESNZ and Ofgem will work together to develop the timelines and format for the reconciliation process, with more detail to be communicated to energy suppliers as it is developed1.