Personal Finance

Fury as energy bills could rise by £17 to stop firms going bust

Plans to raise energy bills by £17 to stop suppliers going bust have been blasted by charities.

Ofgem has launched a consultation to bring in the one-off charge as consumer debts soared to £2.6 billion in the summer.

But charging customers more when many are already struggling to afford current gas and electricity prices was "crushing vulnerable households", critics said.

Industry experts say energy debt is "the highest level we have seen".

Citizens Advice said it was helping more people who can't afford their energy than ever before and more households were running up debt even during the warmer summer months.

Chief executive Dame Clare Moriarty said: "High energy prices mean millions of people remain at risk of falling behind in the coming months. An increase in the price cap to pay for higher debts will make people's bills even more unaffordable. Any change must be in the best interest of all consumers."

Dame Clare joined fuel poverty charity National Energy Action in calling for more support from the Government.

Its chief executive Adam Scorer said: "The enormous weight of household energy debt is crushing vulnerable households. Government cannot just look the other way and hope for the best.

"This is the highest level of energy debt we have seen, it is growing quickly and concentrated in the poorest households. Energy bills are now on average £800 per year higher than they were at the start of the energy crisis.

"While industry and regulator-led support is welcome, Government must put in place additional targeted support and establish a Help to Repay scheme and an enduring social tariff."

'More pain if firms go bust'

Ofgem, the energy regulator, said bills could rise further if it did not take action and suppliers collapsed.

NimbleFins previously reported how last year about 10% of the energy price cap was funding 28 firms who had gone bust.

If the one-off tariff was approved, Ofgem said it would delay any increase to the energy price cap until April to help consumers.

Tim Jarvis, director general for markets at Ofgem, said: "We know that households across the country are struggling with wider cost-of-living challenges, including energy, so any decision to add costs to the price cap is not one we take lightly.

"However, the scale of unrecoverable debt and the potential risk of suppliers leaving the market or going bust, which passes on even greater costs to households, means we must look at all the regulatory options available to us.

"We must consider the fairest way to maintain a stable energy market and we will do this in consultation with all our partners to ensure we are protecting the most vulnerable households."

Debt has risen due to rising wholesale prices alongside customers not being able to afford their bills.

But Simon Francis of the End Fuel Poverty Coalition said the Government needs to introduce a 'help to repay' scheme to "get Britain's households back on an even keel".

He added: “Households are struggling under the huge weight of energy debt – which has been caused through no fault of their own, but by record energy bills.

“All this time, energy firms have continued to profit from the misery of people racking up debt and living in cold damp homes."

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Helen Barnett

Helen is a journalist, editor and copywriter with 15 years' experience writing across print and digital publications. She previously edited the Daily Express website and has won awards as a reporter. Read more here.


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