WHD cost recovery moves to the unit rate from 1 April 2026

The Department for Energy Security and Net Zero confirmed in its response to a consultation that energy suppliers should recover Warm Home Discount costs from the unit rate for electricity and gas from 1 April 2026¹. The consultation ran from 1pm on 8 December 2025 to 11:59pm on 6 January 2026 and received 778 responses¹. The government response was published on 12 February 2026, and the tables in the response document were updated on 2 April 2026 because the figures were incorrect¹.

The change moves the cost of the scheme off the standing charge, described in the consultation as "a fixed daily fee applied to all customers regardless of energy usage", and onto the per-kWh rate¹. The costs of the scheme were previously recovered through the standing charge, at £39 on the typical dual fuel bill¹. The House of Commons Library reports that 80% of the costs of the Warm Home Discount will shift to unit costs from April 2026, adding to the underlying cut in gas standing charges and reducing the extent of the electricity standing charge increase³. Policy cost elements of standing charges were reduced from April 2026 because of this shift³.

Of the 778 responses, 733 (94.2%) came from individuals, 19 (2.4%) from consumer, charity and advocacy groups, nine (1.2%) from energy suppliers and 17 (2.2%) from other respondents². On the question of whether costs should move to the unit rate, 683 respondents said yes and 91 said no, with 774 answering². The government said recovering costs through unit rates is "a more progressive approach to funding the scheme" and responds to fairness concerns raised about standing charges². It also said that "at the current time the government has no plans to move Warm Home Discount costs to general taxation"².

"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 households with unavoidably high energy needs and those with electric storage heaters². It said a gas heated house with high demand due to medical needs could see its annual energy bill increase by around £29 under the move to the unit rate in isolation, but that when wider Budget 2025 measures are accounted for, these households are expected to see approximately £195 net costs removed from bills². For a high usage electric heated household, it put the combined figure at approximately £395 of costs removed². The government also said the policies announced at Budget 2025 will remove an average of £150 of costs from household energy bills from April 2026².

Which? reported that Ofgem announced a 7% drop in the price cap from 1 April 2026, to £1,641 for a typical household, and confirmed the decision to move Warm Home Discount costs from standing charges to the unit rate, which is why the gas standing charge decreased⁵. Energy UK said Ofgem set the cap at £1,641, on average £117 cheaper than the previous period, and that Warm Home Discount costs have moved from the standing charge to the unit rate, lowering the standing charge and energy costs for low energy users⁶. Energy UK's wording describes the direction of the move differently from the government's; the government response and the Commons Library both state the costs move from the standing charge to the unit rate¹.

Why it matters for households

A standing charge is paid regardless of how much energy a home uses, so it takes up a larger share of the bill in low-use homes³. Moving the Warm Home Discount onto the unit rate links that part of the bill to consumption, which shifts cost away from households that use little energy and towards those that use more. The Commons Library notes that at the low consumption level for electricity, standing charges make up 32% of a final bill, meaning one quarter of consumers face standing charges worth at least that share of their annual electricity bills³. For a household trying to reduce its reliance on bought-in energy, through appliance running costs or otherwise, a smaller fixed daily charge reduces the cost of using less. The trade-off is that the same change raises the cost of each unit used, which affects homes with high or unavoidable consumption, including those using electric heating². The government's own figures put the isolated effect on a high-demand gas heated household at around £29 a year, before wider bill measures are counted². The Warm Home Discount itself remains a rebate for eligible households, and the change concerns how the scheme is funded across all billpayers rather than who receives it. The wider context of levies and their distribution across bills is set out in policy costs and levies on energy bills, and the relationship between bill design and energy independence turns on how far fixed costs are spread across consumption.

What happens next

The government said it will update how the supplier reconciliation process is conducted so that supplier obligations are settled against actual energy volumes supplied, with an industry wide feedback loop so that any aggregate under or over recovery from differences between forecast and actual demand in one scheme year is corrected in the following year¹. It said it will continue with the earlier interim reconciliation implemented in 2025-26 for the next scheme period². Subject to parliamentary approval, DESNZ said it will later carry out the necessary re-enactment and associated amendments to the Warm Home Discount (Reconciliation) Regulations 2022 by issuing the Warm Home Discount (Reconciliation) Regulations 2026². DESNZ and Ofgem will work together to develop the timelines and format for the process, with more detail to be communicated to energy suppliers as it is developed². The government said it was not persuaded that delaying implementation or establishing a reserve fund would be proportionate².

Sources6 cited

1. Warm Home Discount (WHD): cost recovery - GOV.UK, gov.uk
2. Warm Home Discount (WHD): cost recovery - government response (accessible webpage) - GOV.UK, gov.uk
3. Energy standing charges - House of Commons Library, commonslibrary.parliament.uk
4. DESNZ annual report 2025 to 2026: Performance report (HTML) - GOV.UK, gov.uk
5. The energy price cap will drop by 7% in April - Which?, which.co.uk
6. Energy UK Explains: April 2026 price cap - Energy UK, energy-uk.org.uk