Consumer Scotland has recommended that the Department for Energy Security and Net Zero (DESNZ) drop its proposal to recover the cost of the Warm Home Discount through the unit rate rather than the standing charge. The independent body published its consultation response on 7 January 2026.
"Consumer Scotland recommends that DESNZ does not proceed with the measure set out in its consultation."
The response states that the change would force households with higher energy use to bear more of the WHD cost. Under current arrangements, the cost per eligible household is set by DESNZ and equates to £39 for the average dual fuel household according to the consultation1. Consumer Scotland says that instead of paying £39 a year towards the WHD as at present, an individual could be paying £68 if DESNZ proceeds as proposed1.
The body argues that higher consumption does not always track income. It cites households that are terminally ill, those with essential medical equipment at home, the elderly, those with young children and those in poorly insulated homes as groups with unavoidably high use1. It also points to the Scottish Housing Condition Survey 2023, which found that 52% of households using electricity as their primary heating fuel were fuel poor, higher than households using gas (32%) and oil (26%)1.
Consumer Scotland sets out its view of the distributional effects of the proposal:
| Household group | Predicted effect |
|---|---|
| Low usage households | Savings of £17 per year |
| Typical dual fuel households | Savings of £4 per year |
| Higher than median consumption households | Bear more of the WHD cost |
Source: Consumer Scotland1
The response also raises technical concerns. It notes the consultation's statement that "There is no way to mandate how suppliers allocate WHD across unit rates" within multi-rate tariff structures1. Consumer Scotland says supplier discretion could shift WHD costs between consumer groups on tariffs such as Economy 7 and Economy 10, and that Scotland has a significantly higher number of households with restricted meters than the rest of Great Britain1. It adds that suppliers may apply a risk premium to unit rates to guard against under-recovery, for example in a mild winter, raising costs for all consumers1.
Why it matters for households
The WHD is a fixed policy cost: it is based on the number of eligible households rather than on how much energy they use1. Recovering it through the unit rate would tie that cost to consumption, so a home that uses more units would pay more towards the scheme. For homes with high essential use, such as those heated by electricity or running medical equipment, that shifts cost onto the households the scheme is designed to help1. Consumer Scotland also warns that the benefit for lower users is small, at £17 a year for low usage households and £4 for typical dual fuel households, and that better-off households able to cut volumetric charges through solar and batteries could gain while lower income households without that investment pay higher unit rates1. The Warm Home Discount in Scotland operates with a fixed proportional share of the overall budget, which the response says is adjusted each year1.
What happens next
Consumer Scotland says any change to how costs are passed to consumers should be considered as part of Ofgem's Cost Allocation and Recovery Review (CARR), which is examining how all energy system, environmental and social scheme costs reach consumers1. It warns of incoherent policy development if a decision on where WHD sits is made before CARR concludes, risking Ofgem having to revisit the issue or anchoring bill structures around a decision taken outside the review1. No decision by DESNZ on the consultation has been reported.