UK to increase the cost of household energy bills to help pay off suppliers' bad debts

The UK's energy regulator said on Friday that it intends to temporarily raise the price ceiling on energy bills in order to lessen the likelihood that suppliers may fail in the face of over three billion pounds in outstanding energy debt from customers.

Following Russia's invasion of Ukraine, wholesale energy costs skyrocketed, setting records for high energy prices last year. Government help kept prices in check, with most families paying an average of £2,500 in January.

Since then, the cap has decreased and will average £1,928 a year starting in January, but prices are still historically high and energy debt has reached its highest point ever as a result of rising living expenses and pricing pressures, according to regulator Ofgem.

According to Tim Jarvis, director general of markets at Ofgem, "the record level of debt in the system means we must take action to ensure suppliers can recover their reasonable costs, so the market remains resilient and suppliers are offering consumers support in managing their debts."

A one-time adjustment of £16 per customer, or around £1.33 per month, would be sought after by Ofgem, and it would be paid between April 2024 and March 2025.

Ofgem also suggested that any additional expenses not be borne by customers—usually those from less wealthy households—who use prepayment metres for their electricity.

(Sources: investing.com, reuters.com)