UK to lift energy bills to help offset suppliers' bad debts

Britain’s energy regulator said on Friday that it plans a one-time rise to the price ceiling on energy bills to decrease the danger of providers going bankrupt amid over 3 billion pounds ($3.8 billion) in consumer energy debt.

Soaring wholesale energy costs in the aftermath of Russia’s invasion of Ukraine resulted in record high energy prices last year, which were limited by government support at an average of 2,500 pounds ($3,191) for most homes in January.

Since then, the maximum has been reduced to 1,928 pounds per year on average beginning in January, but prices remain historically high, and energy debt has reached its highest level ever owing to pricing and wider cost of living pressures, according to regulator Ofgem.

“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,” Tim Jarvis, Ofgem’s director general for markets said.

Ofgem said it would seek to add a one-off adjustment of 16 pounds per customer, equivalent to around 1.33 pound a month, to be paid between April 2024 and March 2025.

Ofgem also proposed that any extra costs would not be passed onto customers who use prepayment meters for their energy, typically less affluent people.

“The proposals set out today are not something we take lightly. This approach will ensure the costs are recovered fairly, without penalising a particular group of customers,” Jarvis said.

($1 = 0.7835 pounds)