Warm Home Discount Scheme

makfai

There is something odd about the arrangements under the Warm Home Discount Scheme for consumers.

During PM questions on 17 October 2012 the PM said that being able to switch energy suppliers is key but this does not seem to be reflected in Government and suppliers’ policy towards the ‘vulnerable’.

Previously, energy suppliers had a scheme whereby the 'vulnerable' could be placed on a special 'low' tariff (e.g. British Gas = 'Essentials Tariff'). This meant that people paid less when they got their bill or when they topped up a meter. The Government has changed this.

The Government has now introduced a Warm Home Discount Scheme. Under the ‘broader’ scheme suppliers give an eligible 'vulnerable' user a lump-sum rebate of £130. However, this is not paid until the end of winter i.e. between January to March. Pre-payment meter users – many of whom are the most ‘vulnerable’ of users – now have to pay the full tariff at the time they top-up.Frankly, they may simply not have adequate funds to meet these higher costs during the winter or even throughout the year.

Oddly, even if a customer uses gas to heat his/her home, the rebate is applied ONLY to the ELECTRICITY account/meter. A customer cannot have any of the money paid to their gas account/meter.This seems a bit odd when the scheme is entitled Warm Home Discount.

British Gas has confirmed in writing to me that, because the terms of the scheme were set by Government,

· suppliers cannot change those terms; and
· a user cannot choose to have the money paid (in full or part) to a gas account/meter.

This means that vulnerable people on pre-payment meters may find themselves in a ludicrous situation where their electricity meter is £130 in credit but they cannot afford to top-up the gas meter to warm their home under this, so-called, Warm Home Discount Scheme.

The scheme also allows each energy supplier to set up their own eligibility criteria. The consequence of this is that, if a person is accepted on the scheme of one supplier, the user will lose their eligibility if they switch to another supplier. The user has to apply again to the new supplier - BUT the number of persons classed as 'vulnerable' is capped by each supplier.Anyone changing will not know if their new supplier will accept them as 'vulnerable'. Even if the user is ‘more deserving’ they may not be accepted simply because the quota is full. The danger of quotas having reached their maximum is increased for persons switching to a new supplier. That new supplier may have already reached the quota. The new supplier may offer a cheaper tariff but the vulnerable user may lose their £130 either because they do not meet the new suppliers eligibility criteria or because their scheme is full. Those offering advice on switching may not take this into account when doing their calculations. The suppliers do not announce the current state of their quotas.

A supplier knows that placing someone on the eligibility list for the Warm Home Discount Scheme helps lock the most vulnerable into that supplier as the user will, understandably, be concerned that they will lose their £130rebate if they switch. It is OK to switch if you are not a 'vulnerable' user but it is a bit of a gamble if you are!

This scheme appears to be a step-back:

1. users have to pay higher prices at the time they purchase the energy. This is highly significant to pre-payment users.

2. the rebate is only payable to the electric account/meter and not in any proportion to gas;

3. customers using gas to warm their home may have a massive positive balance on their electric account/meter but still be unable to meet the costs of warming their home using gas;

4. the eligibility criteria is not uniform throughout the scheme;

5. the number of users who may be classed as‘vulnerable’ can be capped by suppliers. This means that the scheme is based not solely on need but is, in effect, qualified by a‘first-come-first-served’ policy . Even though a user may be more deserving in terms of need they may be rejected simply because the supplier has met the quota which that supplier has set.

6. the current status of quotas is not published so users do now know in advance of switching;

7. users have no assurance that if they switch supplier they will still be eligible for the £130;

8. companies advising switching advice/services may not take into account the possible loss of the £130;

9. the risk to vulnerable users of losing their eligibility for the £130 is a deterrent to switching suppliers.

Richie-from-the-Boro

makfai

Broader Group Scheme

Its news to me that the 2nd tier eligibility restricts the benefit to electricity only. I'll get back to you on this.

Much if not most of the rest of your post has been the generally understood 'custom & practice delivery' for most of the last year already, of what is an essentially a 'big six concession' cash limited voluntary scheme.

• A Core Group – this would be the majority of spend from energy suppliers over the four years of the scheme (2011-12 to 2014-15). These are a well-targeted group of the poorest pensioners who have a high propensity to fuel poverty and a higher risk of excess winter deaths. This section of the model would build on the 2010 Energy Rebate Scheme, a successful data matching pilot between DWP, DECC and the six major energy suppliers that resulted in an £80 rebate being provided to over 200,000 of the poorest pensioner households this year.

• A Broader Group – whilst the Core Group have a high tendency to be fuel poor, it is recognised that other groups are at risk of fuel poverty. The proposals would therefore also ensure some support will be available for other groups of vulnerable consumers.

Note : those who have a high propensity to fuel poverty are already adequately catered for, the Core Group are, and have been for 26 weeks, on a regulated DWP auto 'passported' scheme and their supplier is already pre-notified of their automatic eligibility.

makfai

I appreciate the scheme has not just been announced it is merely that I have only just come across it.

The whole scheme (whether the 'broader' group or not) is restricted to payment via the electricity account/meter. Seems daft to me.

The scheme is supposed to 'DISCOUNT' the energy used to 'WARM' the 'HOME' yet it only gets paid to an electricity account/meter

See https://www.gov.uk/the-warm-home-discount-scheme
and
http://www.decc.gov.uk/en/content/cms/funding/whds/whd_broader/whd_broader.asp

As regards eligibility this is described as follows:

Eligibility https://www.gov.uk/the-warm-home-discount-scheme/eligibility
'You qualify for the discount if on 21 July 2012 your supplier was part of the scheme, your name (or your partner’s) was on the bill and you were either:
• 80 or over and getting the Guarantee Credit element of Pension Credit
• under 80 and only getting the Guarantee Credit element of Pension Credit (you won’t qualify if you also get Saving Credit)

If you don’t qualify

Some suppliers offer the discount to vulnerable people (eg, those on a low income). Each supplier has their own rules about who else can get the discount.'

So when you refer to pensioners even the 'core' scheme only applies to those pensioners who meet a certain criteria and still leaves each energy supplier to arbitrarily decide the criteria for others. They can also decide a cap for the number of vulnerable users which seems to undermine the approval based solely on need.

Richie-from-the-Boro

see #6 - 14 months ago

makfai, my interest is in your claim that """2nd tier B]broader group[/B eligibility restricts the potential benefits to electricity customers only and denies gas users the same right to be considered""".

Both groups are described by Government as vulnerable :

The core is pre - scribed, by Government as """a high propensity to fuel poverty and a higher risk of excess winter deaths""" and is legislated for specific delivery to an individual

The broader is not pre - scribed and is """at risk of fuel poverty""" only, no mention is made of """a higher risk of excess winter deaths""" and is not legislated for delivery to an individual but anyone the supplier decides fits in to whatever criteria they set.

That's why the non data matched broader group is left to energy supply companies to decide who / if / when / how much / etc they will subsidise if at all. Put simply the broader group may be vulnerable, they may be incredibly wealthy, neither the state nor the supply industry have any way of knowing their worth.

Amendments

1.3.i Require energy suppliers to deliver up to £1.1bn of support to around two million fuel poor households each year through the Warm Home Discount - Already - Started Ends Mar 2015

1.3.ii Use data matching to inform energy companies which of their customers is in receipt of a subset of pension credit, and so must receive an energy bill discount under the Warm Home Discount scheme - Starts Oct 2012 Ends Oct 2014

1.3.iii Inform some additional customers that may be eligible that they need to claim the Warm Home Discount - Starts Oct 2012 Ends Oct 2014

1.3.iv Inform Ofgem of energy suppliers’ obligations under the Warm Home Discount to provide support for fuel poor households not in the Core Group Starts - Feb 2013 Ends Feb 2014

makfai

I cannot find the quote to which you refer i.e. """2nd tier B]broader group[/B eligibility restricts the potential benefits to electricity customers only and denies gas users the same right to be considered""".

I have never said that.

The point I have made is that the discount when paid is applied to ONLY electricity accounts/meters. Many gas customers will be using gas to provide the warmth for their home but the 'DISCOUNT' (the word used in the scheme) will not be applied to their gas account/meter. It will only be paid into their electricity account/meter. This is irrational.

If one is to be given a DISCOUNT on the fuel used to provide the warmth it should be a discount on the payment for the fuel actually used - gas account/meter if you are using gas for warmth or electric if using that for warmth.

makfai

'That's why the non data matched broader group is left to energy supply companies to decide who / if / when / how much / etc they will subsidise if at all. Put simply the broader group may be vulnerable, they may be incredibly wealthy, neither the state nor the supply industry have any way of knowing their worth.'

Suppliers CAN AND DO assess eligibility. The supplier's each have a vetting system which each supplier draws up using criteria arbitrarily chosen by them and not disclosed. Each supplier has a cap on the numbers - not disclosed. Each supplier requires people seeking eligibility to provide them with certain information. The supply industry is assessing each applicant.

I believe that the nine points I have listed in my original post identify weaknesses in this scheme not least being that the so-called DISCOUNT is not necessarily applied to the fuel used. I believe the other points I made are equally valid.

makfai

I have just been to the legislation at http://www.legislation.gov.uk/uksi/2011/1033/made

I note that the wording of that legislation refers to a 'prescribed rebate'.

If this is a rebate of money spent on fuel for warming the home then why cannot people who use gas for this purpose have the money paid to their gas account/meter through which the money to be rebated has been paid?

makfai

I have another question about this scheme. My query refers to the circumstances where a user uses gas to warm the home and obtains gas from Supplier A but electric from Supplier B. To whom does the user apply for inclusion in the scheme?

Under these arrangements Supplier B 'rebate's the money which has been paid to Supplier A - seems a bit odd to me!

Man_Overboard_2

I totally agree with your original 9 points.

I would guess that the 'logic' behind crediting the discount to electricity accounts is based upon the fact that whilst 'everybody' uses electricity, there are lots of people who have no gas.

I have in fact already received my £130 (credited to my electricity account) for the winter of 2012/2013. Since my monthly direct debit is based upon my annual consumption, and does not include the £130, it should be simple for me to claim a refund of the surplus in my electricity account, and then credit it to my gas account.

As ever, all state 'benefits' ignore the day-to-day reality of people's lives, and assume that everybody has the flexibility and cashflow to deal in annualised figures (not to mention the ability to understand the rules, and be able to argue effectively with the call-centre personnel who pick up the phones).

makfai

Man_Overboard wrote: »

I have in fact already received my £130 (credited to my electricity account) for the winter of 2012/2013.

This makes it all the more confusing when the payments are due between Jan-March 2013 and are described as 'rebates'. However, I am pleased to see that they will be in place (at least for some:)) before the challenge of meeting bills increased by winter arises.

I agree with the points you made. The whole idea of the legislation is to 'establish a scheme for reducing fuel poverty' which is simple and easy to use. I cannot see the logic in paying a 'rebate' for money spent on warming home to a fuel account/meter not used for that purpose!

Is this designed by the writers of 'The Thick of It'?

makfai

If one looks at the legislation on this one will see that the money paid to the electricity account/meter is designed and described as a ‘rebate’. See here and here.

As the money is a rebate on the fuel paid to warm the home then it is only rational to pay the rebate on the fuel used for that purpose. It is neither necessary nor rational to make it complicated for these vulnerable people. It is logical to pay a rebate on the type of fuel actually used – if it is electric then pay it to the electric account/meter but if it is gas pay it to the gas account/meter. Why do otherwise?

Paying a rebate for a specific fuel type (particularly for a customer who pre-pays for a fuel) also appears to have the support of Regulation 22 (1) of the legislation which says:

Provision of rebates


‘22.—(1) A rebate to an eligible customer under this Chapter must be provided by—
(a) crediting the rebate to the customer’s account;
(b) tendering payment to the customer; or
(c) providing a customer who pre-pays for a fuel type with credit against future use of that fuel type.’

So not only is it rational but the law already requires for a customer who pre-pays for a fuel type to be provided with credit against future use of that fuel type. Why then does the rebate get put only on the electric meter?

Please note that my reference to and argument regarding Reg 22 is invalid - please see post #21

I am still confused by the situation where a user obtains gas from one supplier and electric from a different supplier and uses gas to warm the home. It looks as if the policy which suppliers claim is right leaves the electricity supplier to rebate money spent with a different supplier. Does this make any sense to anyone?