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Cheapest energy deals could leave vulnerable worse off

Emma Lunn
Written By:
Emma Lunn

Low income households could miss out on the Warm Home Discount if they opt for a best buy energy tariff.

Two million vulnerable households could be left up to £101 worse off if they pick an energy deal from one of the cheapest suppliers, according to Migrate.

The automatic switching service found that 90 per cent of the cheapest energy deals are from suppliers which don’t offer the Warm Home Discount.

Migrate calculated that vulnerable customers could save £101 a year by opting for a more expensive deal with a supplier which does subscribe to the scheme.

What is the Warm Home Discount?

The Warm Home Discount is a government-led scheme offering financial help to people who are having difficulty paying their energy bills during the winter months when energy tends to be more expensive.

The scheme offers a £140 rebate on energy bills to those who meet the eligibility criteria. However, your energy company needs to subscribe to the scheme for you to benefit from the discount.

There are more than 70 energy suppliers in the market, but only 45 of these currently subscribe to the Warm Home Discount scheme.

Vulnerable customers could miss out

Migrate analysed the top energy deals currently available and found that just three (15 per cent) of the top 20 cheapest deals were from suppliers which are part of the Warm Home Discount scheme. Only one of the 10 cheapest tariffs was from a provider which offered the discount.

Migrate has warned that shopping around and switching to the best buy deal could result in vulnerable households overpaying by as much as £101 per year, versus opting for a more expensive tariff from a supplier which offers the discount.

According to Migrate, the cheapest energy deal currently available is Green’s Oak tariff which has an average cost of £868 a year. But Green Oak doesn’t offer the Warm Home Discount which means those who are eligible won’t get the £140 one-off payment.

The cheapest tariff from a Warm Home Discount scheme subscriber is Lumo Energy’s Online Fixed V27 that has an average cost of £907 a year. But when the warm home discount of £140 is applied, the average cost falls to £767 a year – that’s a saving of £101 compared to Green Oak’s market-leading tariff.

George Chalmers, CEO of Migrate, said: “It’s well known that people rarely look past the first few deals presented to them when it comes time to choose an energy tariff, as naturally they are usually looking to save the most money possible.

“For years energy customers have constantly been told to switch to cheaper deals, but our research shows that following this advice could result in the most vulnerable overpaying by more than £100 a year if they are not careful when switching.

“The problem is that Warm Home Discount is not factored into the price savings shown on comparison websites, meaning that the ‘illustrative’ savings figure is not accurate and could even be considered misleading for those that qualify for other discounts.”

Filtered search results

Migrate users who qualify for the Warm Home Discount can choose to only view providers who subscribe to the scheme, and when it comes time for them to be switched, they’ll only be moved to suppliers which also offer the discount unless another deal is cheaper even with the discount applied.

The site’s research found that only one of the ‘big four’ energy comparison services gives customers the option to filter by Warm Home Discount, which means each year millions of vulnerable households could potentially be left out of pocket.

“While we wouldn’t imply the issue is intentional, it does clearly show the lack of care and consideration that exists for vulnerable customers across the energy market,” said Chalmers.