Consumer Scotland opposes moving Warm Home Discount costs to the unit rate

Consumer Scotland has recommended that the government should not move the cost of the Warm Home Discount (WHD) from the standing charge to the unit rate, in its response to a Department for Energy Security and Net Zero (DESNZ) consultation. The response was published on 7 January 2026¹.

The body, established by the Consumer Scotland Act 2020 and accountable to the Scottish Parliament, said the change would force households with higher energy use to bear more of the cost of the scheme¹. It said that instead of an individual paying £39 a year towards the WHD as at present, they could be paying £68 if DESNZ proceeds as proposed¹.

Consumer Scotland said the change would mean households with higher than median consumption bear more of the cost, and that if suppliers have to be compensated for the additional risk of under-recovery from low users, more than half of all households would be worse off¹. It cited predicted savings of £17 per year for low usage households and £4 per year for typical dual fuel households¹.

The WHD is currently based on the number of households eligible for means-tested benefits in any given year in England and Wales, with Scotland receiving a proportional fixed percentage share of the overall WHD budget, adjusted each year¹. The cost per eligible household is set by DESNZ, equating to £39 for the average dual fuel household according to the consultation¹.

Consumer Scotland argued that high energy use does not always correlate with wealth. It cited the Scottish Housing Condition Survey 2023, which found that 52% of households using electricity as their primary heating fuel were fuel poor, compared with 32% of households using gas and 26% using oil¹. It also cited research by Marie Curie finding that a terminally ill person's energy bill can rise by as much as 75% after their diagnosis¹.

The response raised technical concerns about multi-rate tariffs such as Economy 7 and Economy 10. It said there is a significantly higher number of Scottish households with restricted meters compared with the rest of Great Britain, and that the consultation notes there is no way to mandate how suppliers allocate WHD across unit rates¹.

Consumer Scotland said the change should instead be considered through Ofgem's Cost Allocation and Recovery Review, which is examining how all energy system, environmental and social scheme costs are passed through to consumers¹.

Why it matters for households

The WHD is a fixed cost per eligible household, currently recovered through the standing charge that appears on bills regardless of how much energy is used. Moving it to the unit rate would mean the cost is recovered per unit of gas or electricity consumed, so households using more energy would pay more towards the scheme¹.

Consumer Scotland said the households affected by higher costs would include those with unavoidably high energy use: people who are terminally ill, those with essential medical equipment at home, the elderly, households with young children, and those in poorly insulated homes¹. It said many of these households would be worse off under the change¹.

Households on multi-rate tariffs, including restricted meters more common in Scotland, could be affected by how suppliers choose to spread WHD costs across peak and off-peak unit rates, the response said¹. Consumer Scotland said consumers in Scotland on multi-rate meters are often linked to electric heating and many live in rural areas¹.

The response also said the predicted savings for lower usage households are small: £17 per year for low usage households and £4 per year for typical dual fuel households¹.

What happens next

The consultation response was published on 7 January 2026¹. No decision by DESNZ on whether to proceed has been reported. Consumer Scotland said a decision on where WHD costs sit before Ofgem's Cost Allocation and Recovery Review concludes risks incoherent policy development between the two bodies¹.