Millions of households could see an annual saving of £39 on their energy bills due to proposed changes in the funding structure of the Warm Home Discount. The government is seeking feedback on a plan to shift the cost burden from the standing charge to the unit rate, primarily benefiting low-energy users and low-income families struggling with heating costs. The consultation period for this proposal ends on January 6.

Renowned consumer advocate Martin Lewis praised the initiative, stating it is a step in the right direction. The Warm Home Discount program, managed by the government, offers a £150 discount on electricity bills to qualifying low-income and vulnerable households during the winter season. The scheme has been extended to reach an estimated six million households this winter, up from around 2.7 million previously.

Currently, suppliers recoup costs through the standing charge applied to all customers regardless of energy consumption. The proposal suggests transferring this cost to the unit rate, the charge per kilowatt for electricity and gas, starting from April next year. While most households, especially low-energy users, are expected to benefit from this change, higher energy consumers, such as households charging electric vehicles at home, may face increased costs.

Simultaneously, the government’s promise of a £150 yearly reduction in average energy bills will be implemented through measures outlined in the Budget. This includes ending the Energy Company Obligation and shifting funding for the Renewables Obligation to general taxation. The government claims these actions will lead to cost reductions of up to £395 for households heavily reliant on electric storage heating.

Moneysavingexpert.com founder Mr. Lewis highlighted the potential positive impact of the proposed changes on energy bills. He emphasized the need to address the issue of standing charges, which he believes penalize low-energy users and contribute significantly to high bills. The government estimates that 16.5 million households, including 2.8 million low-income households, will benefit from the shift, while 12 million households may experience a financial setback. However, factoring in the Budget measures, these households are still expected to save £138 annually.