Additional Burden on Households
Energy suppliers are facing criticism for introducing a new £16 annual tax on consumers to recover nearly £3 billion in bad debt. The move, labeled “outrageous,” comes in response to a record-high level of debt owed by customers during the ongoing costs crisis.
Ofgem’s Proposal and Implications
Ofgem, the industry regulator, has unveiled proposals allowing suppliers to recuperate the money by imposing a one-off £16 charge on the regulated price cap, effective from April to the following March. This translates to an extra £1.33 per month for consumers already anticipating a rise in the price cap to an average of £1,928 annually from January 1.
Addressing the Record Level of Debt
Tim Jarvis, director general for markets at Ofgem, justified the move, emphasizing the necessity to address the unprecedented debt levels. He stated that the proposed solution aims to ensure suppliers can recover their reasonable costs, maintain market resilience, and offer support to consumers in managing their debts.
Ofgem clarified that the additional charge would facilitate suppliers in establishing payment plans for struggling customers, writing off unmanageable debt on a case-by-case basis, and arranging affordable repayment holidays. Importantly, the tax will not be imposed on customers with pre-payment meters.
Concerns and Reactions
David Cheadle of the Money Advice Trust expressed concern about the escalating energy debt, affecting millions of people facing challenges in adequately heating their homes. Richard Neudegg from Uswitch.com highlighted potential consequences, warning that if suppliers cannot cover bad debts, it may lead to more aggressive pursuit of those in vulnerable situations.
As the proposal undergoes scrutiny, consumers await the decision on the revised price cap in the new year, aware of the added financial burden looming on the horizon.
Source：express.co.uk
