New rules mean smaller firms will have to offer the discount to customers
Small energy firms will soon have to offer the Warm Home Discount to qualifying customers by law, the Government has ruled.
This is the scheme launched in April 2011 to offer the most vulnerable people a £140 discount on their energy bills over the coldest months.
In an announcement this week, the Government said “more smaller energy suppliers will be required to give vulnerable customers, including pensioners, £140 off their bills”.
In a statement, the department for business, energy & industrial strategy said having more energy suppliers in the £340 million scheme will increase consumer choice and improve switching for vulnerable customers as part of its plans to eradicate fuel poverty.
It follows a report earlier this year that found the scheme may be doing more harm than good because so few providers offer it.
The Social Market Foundation think tank said that the initiative may be discouraging customers from switching because they’re worried they’ll lose the discount if they go elsewhere.
This meant many were at risk of overpaying – because they were avoiding smaller firms – which can sometimes offer some of the most competitive deals in the market .
In a statement, the Government said its decision to widen the energy saving discount is part of its plan to tackle fuel poverty and make the system “fairer”.
Around 20,000 more pensioners will qualify for the Warm Home Discount in 2019/20, and an additional 10,000 pensioners by 2020/21.
Energy and Clean Growth Minister, Claire Perry, said: “Tackling fuel poverty is a key priority for this government. Everyone who is automatically eligible for the £140 discount on their energy bills each winter should be able to get it. It shouldn’t be dependent on which energy supplier they are with, so we want to change that.”
“This is why, as part of our commitment to create an energy market that works for everyone, we are lowering the threshold so more smaller suppliers will be able to offer this lifeline discount to their customers who most need it.”
The Warm Home Discount provides £140 off winter fuel bills each year. It helps around 2.2 million customers who struggle to meet their energy costs during the coldest months.
A Bill is also currently progressing through Parliament to cap poor value standard variable and default tariffs for 11 million households.
This temporary cap will protect consumers, including vulnerable consumers, until effective competition and an energy market that works for everyone is in place.
Ofgem also extended its Safeguard Tariff Cap on pre-payment meter tariffs to protect a further 1 million vulnerable households in March, bringing the total protected to 5 million households over winter.
To find out more about the scheme, see our guide on how to apply for the warm home discount .