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Energy price warning: Ofgem ‘wants £21 increase’ for households over ‘bad debt’ | Personal Finance | Finance

A proposal has been made to hit UK households with a £21 increase to energy bills in a move likely to spark anger across the country. The radical plan is an attempt to tackle the rising number of bill payers unable to meet their charges during the coronavirus pandemic. 

It warned that if these issued were left untackled, it could create wide scale problems.

Its report, entitled ‘Lockdown Debts: Estimating the size of lockdown arrears’ offered a stark warning on the matter.

The report reads: “If left unaddressed, these levels of lockdown arrears will have negative impacts beyond the individuals affected.

“Many creditors – including landlords, local authorities, and essential service providers – are likely to face high levels of bad debt.

“This poses a risk to these providers, and will, at a minimum, result in higher debt costs that will eventually be borne by consumers and bill payers.”

The plans mean Ofgem is considering whether higher ‘bad debt’ costs should be factored into the default tarrif price cap when it is next updated in April 2021.

Ofgem has said the proposed increase will be partially offset by the ending of a temporary £15 increase, reflecting the outcome of a judicial review which examined how Ofgem calculates suppliers’ wholesale energy costs in the first cap period.

It added the net impact on bills of these two changes would result in a £6 increase, with the regulator continuing to monitor the energy market in the meantime. 

More to follow…

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