Energy UK urged the UK Government to replace the current energy support approach with a targeted social discount that better matches aid with household needs, it said Sunday.
Projections indicate a three-year high for the October price cap, which the Government plans to announce on Aug. 26, while customer debt remains at record levels.
Energy UK said a new scheme should combine income, health, and energy-use data to identify households in need of support and adjust assistance as prices and circumstances change.
The Warm Home Discount now reaches six million customers, but eligibility is based solely on means-tested benefits and does not account for essential energy use linked to medical needs or poor housing.
Public First estimates that the current scheme leaves 2.5 million fuel-poor customers without support, while energy needs can rise due to health conditions or draughty homes.
The existing 150 British pounds ($ 204.50) discount also falls below the government's estimated average fuel poverty gap of 379 British pounds, while the payment has risen by only 10 British pounds over the past decade as energy bills have doubled.
Energy UK said all billpayers help finance the Warm Home Discount, including recipients, reducing the scheme's net benefit for households and lowering it further as participation grows.
The proposed social discount would use different payment levels to better match support with need, raising the overall scheme cost to 1.9 billion British pounds from 1 billion British pounds at current prices.
Under the proposed approach, a low-income household with high energy use could receive 450 British pounds instead of the existing 150 British pounds discount, Energy UK said.
"Too many households continue to feel the strain of high energy bills," Energy UK Chief Executive Dhara Vyas said, calling for a permanent system that provides support when households need it.
Vyas said the proposed discount would better address fuel poverty by matching assistance with individual circumstances, while suppliers and government departments would need to work closely to implement it.
"Our analysis shows this is necessary and that there is a fairer, flexible way to get help to those most in need," Vyas added.
Energy UK said the Government should fund the social discount, but if the Treasury does not cover the full cost, it could fund only the extra support while keeping customers' current contribution unchanged.
The report called for a social discount taskforce involving ministers, senior officials, energy industry data and regulatory experts, and consumer groups to accelerate data sharing and develop the scheme.
Energy UK said a tiered direct rebate would offer a simpler and more practical approach than reducing unit rates, while targeted support should complement broader measures to lower energy costs for all households.