The Warm Home Discount (Reconciliation) (Amendment) Regulations 2026

Published: Tue 8th Sept 26 Came into force: Tue 29th Sept 26

Department: Department for Energy Security and Net Zero
Made under: Energy Act 2010
Applies to: England, Wales, Scotland

Updated the Warm Home Discount reconciliation methodology to calculate supplier market shares based on energy unit volumes instead of customer numbers.

These Regulations amend the reconciliation framework for the Warm Home Discount scheme to align cost redistribution with energy unit-rate recovery.

The instrument directs the Gas and Electricity Markets Authority to calculate suppliers' market shares based on gas and electricity unit volumes delivered to domestic customers rather than the previous method based on customer numbers.

These changes apply to licensed electricity and gas suppliers in Great Britain for scheme years 16 through 20, starting in September 2026.

Arguments For

The Explanatory Memorandum states that recovering costs through energy unit rates rather than standing charges is a fairer and more progressive approach because it links contributions to actual consumption.
The department reports that the revised methodology ensures supplier market shares accurately reflect the extent to which costs are recovered through energy charges under the new unit-rate model.
The legislation states that these changes maintain the principle that suppliers should bear a share of costs that reflects their participation in the domestic energy market.
The department asserts that the volumetric approach responds to public concerns regarding standing charges on energy bills.

Arguments Against

Energy suppliers may face increased administrative burdens due to new reporting requirements for total gas and electricity unit volumes.
Suppliers with high-volume energy users relative to their total customer count may see an increase in their share of scheme costs compared to the previous per-customer methodology.
The Authority (Ofgem) is granted broad powers to determine market shares based on its own estimates if suppliers fail to comply with data requests, which could lead to disputes over volumetric accuracy.

Citation, commencement, extent and interpretation

1.-(1) These Regulations may be cited as the Warm Home Discount (Reconciliation) (Amendment) Regulations 2026.
(2) These Regulations come into force on 28th September 2026.
(3) These Regulations extend to England and Wales and Scotland.
(4) In these Regulations, "the Reconciliation Regulations" means the Warm Home Discount (Reconciliation) Regulations 2022(3).

This section establishes the official name and start date of the regulations as 28 September 2026.

It specifies that the law applies to England, Wales, and Scotland.

It also defines the 'Reconciliation Regulations' as the 2022 version being amended.

Substitution of regulation 2

3 For regulation 2 (interpretation: general), substitute-

"In these Regulations-

"England & Wales Scheme Regulations" means the Warm Home Discount (England & Wales) Regulations 2026(4);

"Scotland Scheme Regulations" means the Warm Home Discount (Scotland) Regulations 2026(5).".

This section updates the definitions to refer to the most recent 2026 versions of the Warm Home Discount regulations for England, Wales, and Scotland.

This ensures the reconciliation process is linked to the current requirements for providing rebates.

Substitution of regulation 4

5 For regulation 4 (notification of GB domestic customer numbers: scheme years 13 to 15) substitute-

"Notification of GB domestic gas and electricity unit volumes: scheme years 16 to 20

4.-.-(1) For each of scheme years 16 to 20, the Secretary of State may give one or more notices to the Authority specifying-

(a) one or more reporting periods for the scheme year; and
(b) one or more reporting dates for the scheme year,

stating that the reporting period or date relates to either interim or final reconciliation, or both, as appropriate.

(2) If the Authority is given a notice under paragraph (1), the Authority must give a notice to all relevant suppliers specifying-

(a) the reporting period; and
(b) the reporting date,

stating that the reporting period or date relates to either interim or final reconciliation, or both, as appropriate.

(3) A relevant supplier to whom a notice under paragraph (2) is given must notify the Authority on or before the reporting date, and in such form as may be specified in the notice, of such information as the Authority may require for the purpose of determining the total volume of electricity and gas units delivered by that supplier to all their GB domestic customers in the relevant reporting period specified in paragraph (2).

(4) If a relevant supplier does not comply with the requirements in paragraph (3), the Authority must, to the best of its ability with the information available to it, determine the supplier's total volume of electricity and gas units delivered to all their GB domestic customers in the relevant reporting period specified in paragraph (2).

(5) The Authority may use volumetric data which it has already previously collected as part of-

(a) voluntary requests for information; or
(b) final reconciliation;

for the purposes of interim reconciliation.

(6) In this regulation-

"reporting date", in relation to a scheme year, means a date specified as a reporting date in a notice given by the Secretary of State under paragraph (1), by which date the supplier's total volume of electricity and gas units delivered to all their GB domestic customers must be reported to the Authority for the purposes of interim reconciliation, or final reconciliation, as the case may be;

"reporting period", in relation to a scheme year, means a period specified as a reporting period, being the period for which the supplier's total volume of electricity and gas units delivered to all their GB domestic customers is calculated, in accordance with a notice given by the Secretary of State under paragraph (1).

(7) For the final reconciliation, the reporting period must conclude on 31st March in any scheme year.

(8) For the final reconciliation, the reporting date must fall within two months from the date of the end of the reporting period.".

This section replaces the requirement for energy suppliers to report customer numbers with a requirement to report the total volume of electricity and gas units delivered.

It empowers the Secretary of State to set reporting dates and periods for these volumes.

If a supplier fails to provide this data, the Authority is authorized to determine the volumes using available information.

Substitution of regulation 5

6 For regulation 5 (determination of market share for scheme electricity supplier) substitute-

"Determination of market share for scheme electricity supplier

5.-.-(1) The Authority must use the total volume of electricity and gas units obtained from scheme electricity suppliers as described in regulation 4 or 5A, as the case may be, in respect of each scheme year to determine the market share of each scheme electricity supplier, in accordance with paragraph (3), to be used for-

(a) the interim reconciliation in that scheme year; and
(b) the final reconciliation in that scheme year.

(2) The Authority must make a determination-

(a) under paragraph (1)(a) as soon as is reasonably practicable after the start of the scheme year;
(b) under paragraph (1)(b) as soon as is reasonably practicable after the reporting date for the final reconciliation.
(3) The market share of a scheme electricity supplier is to be calculated as follows- [Formula omitted for brevity: VMS = (SRg + SRe) / (TSRg + TSRe)]

where- (a) "VMS" is the volumetric market share; (b) "SRg" is the Supplier Recovery (gas)... (c) "SRe" is the Supplier Recovery (electric)... (d) "TSRg" is the Total Supplier Recovery (gas)... (e) "TSRe" is the Total Supplier Recovery (electric)..."

This section introduces a new mathematical formula for calculating a supplier's 'volumetric market share'.

It requires the Authority to combine gas and electricity supply volumes into a single cost-weighted measure.

This calculation determines the proportion of the total Warm Home Discount scheme costs that each supplier is responsible for covering.

Insertion of regulation 5A

7 After regulation 5 (determination of market share for scheme electricity suppliers), insert-

"Provision of relevant information

5A.-.-(1) The Authority may request that a relevant supplier provide it with such information or evidence as the Authority requires for the purposes of carrying out its functions in relation to the reconciliation mechanism as provided for in these regulations.

(2) A request under paragraph (1)-

(a) must specify the date on or before which the information or evidence is to be provided; and
(b) may specify the form in which any information is to be provided.
(3) A relevant supplier must comply with a request under paragraph (1).

(4) If a relevant supplier does not comply with any request made under paragraph (1), the Authority must make any determination required for the purposes of carrying out its functions in relation to the reconciliation mechanism, to the best of its ability using the information available to it.".

This section gives the Authority the power to demand evidence or information from energy suppliers to facilitate the reconciliation process.

Suppliers are legally obligated to meet these requests by the specified deadline. If they do not, the Authority can proceed with market share determinations based on whatever information it has.

Amendment to regulation 7

9 In regulation 7 (calculation of interim reconciliation payments)-

(a) for paragraphs (2) to (4) substitute-

"(2) For the purposes of paragraph (1), the interim reconciliation payment is to be calculated as follows-

(VMS × Aggregate Supplier Commitment)

where-

(a) "Supplier Commitment" is, in this regulation, the projected Warm Home Discount liability, calculated by multiplying £150 with the number of persons specified in the standard rebate notices for that scheme electricity supplier issued to that supplier in relation to that scheme year added together with the total of the original non-core spending obligation for that supplier;
(b) "VMS" is the latest volumetric market share, calculated in accordance with the formula set out in Regulation 5(3);
(c) "Aggregate Supplier Commitment" is the total of the Supplier Commitments across all scheme electricity suppliers."

This section updates how interim payments between suppliers and the Authority are calculated.

It uses the new volumetric market share and the 'Supplier Commitment' (total liability for £150 rebates and other obligations).

Suppliers with a positive result receive a payment, while those with a negative result must pay the Authority.

Substitution of regulation 10

12 For regulation 10 (calculation of final reconciliation payments) substitute-

"Calculation of final reconciliation payments

10.-.-(1) The Authority must calculate, in relation to each scheme year, the amount ("the final reconciliation payment") to be received or paid by each scheme electricity supplier in accordance with this regulation.

(3) For the purposes of calculating a scheme electricity supplier's final reconciliation payment, the final reconciliation payment is to be calculated as follows-

(VMS × Aggregate Supplier Commitment) + Pm - Pr

where- ... "Pm" is the total of any interim reconciliation payments already made... "Pr" is the total of any interim reconciliation payments already received."

This section defines the final calculation performed at the end of a scheme year to settle accounts.

It adjusts the supplier's total liability (based on their actual market share) by accounting for any payments already made or received during the interim phase.

This ensures each supplier pays exactly their fair portion of the total scheme costs for the year.

Saving and transitional provision in relation to scheme year 15

19 The reconciliation mechanism in respect of scheme year 15 must be determined in accordance with the provisions of the Reconciliation Regulations as they had effect immediately before these Regulations came into force.

This section ensures that the previous 2022 rules (based on customer numbers) continue to apply to the reconciliation for Scheme Year 15.

The new volumetric rules only apply to Scheme Year 16 and subsequent years.

Explanatory Memorandum PDF View Source

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