Ofgem has unveiled proposals aimed at safeguarding the energy market and supporting consumers at risk of accumulating unmanageable debt.
New figures released by Ofgem indicate that energy debt has reached an all-time high, totalling almost £3 billion.
This level of debt is attributed to high wholesale energy prices and broader cost of living pressures, resulting in unpaid energy bills.
To address this issue, Ofgem is conducting a consultation on proposals, building on the outline of necessary actions set forth in October.
The proposed one-off price cap adjustment of £16, equivalent to approximately £1.33 per month, is slated to be implemented between April 2024 and March 2025.
This adjustment aims to provide suppliers with the necessary resources to meet Ofgem’s stringent regulations regarding the treatment of customers facing payment difficulties.
Tim Jarvis, Director General for Markets, said: “We know that cost of living pressure is hitting people hard and this is evident in the increase in energy debt reaching record levels.
“We have taken steps to ensure energy firms are taking better care of customers and treating people struggling with debt fairly, through our robust consumer standards, and that companies are getting in touch to offer support, such as affordable payment plans, where needed.
“However, the record level of debt in the system means we must take action to make sure suppliers can recover their reasonable costs, so the market remains resilient, and suppliers are offering consumers support in managing their debts.
“The proposals set out today are not something we take lightly. However, we feel that they are necessary to address this issue. This approach will ensure the costs are recovered fairly, without penalising a particular group of customers.”
