Warm Homes Discount Reconciliation Service

The Warm Home Discount is a key priority in the Government’s programme to tackle fuel poverty and the effects of rising energy prices on low income households.

Launched in April 2011, it has helped over 2 million low income and vulnerable households each year with their energy costs.

The Warm Home Discount is set out in legislation and requires energy suppliers with more than 250,000 domestic customer accounts to participate.

The Regulations which underpin the scheme and the reconciliation mechanism have been amended and so the Warm Home Discount can continue into 2015/16.

The OJEU advert for the Warm Home Discount reconciliation mechanism was originally advertised in August 2011.

Elexon were the only bidder for this contract and met the required standard expected in the Invitation to Tender (ITT).

The reconciliation contract with Elexon began on 1 October 2011 and will end on 30 September 2015 with the value of £138,205.37.

This 4 year contract was awarded to Elexon.

As the current contract with Elexon ends on 30 September 2015 to coincide with the final reconciliation of scheme year 4 (2014/15) it means the scheme does not currently have the means to reconcile the costs of scheme year 5 (2015/16) amongst participating energy suppliers.

The Regulations underpinning the Warm Home Discount stipulate that a reconciliation mechanism needs to be in operation to make sure that participating suppliers provide their market share of rebates to Core Group customers.

The reconciliation mechanism is a vital part of the Warm Home Discount in a competitive market.

The reconciliation calculates the financial flows that are required to balance the market using the number of eligible customers that are identified by each supplier and the market shares of participating suppliers (by customer accounts) calculated on the preceding 31 December of each scheme year.

Once this is successfully carried out it helps to ensure that the Warm Home Discount does not create competitive distortions between energy suppliers.

The extension to the contract is for 2 years and 2 months with a break clause in November 2016 when the final reconciliation in scheme year 5 (2015/16) will have been completed.