Nearly 200,000 individuals receiving benefits may have their debts to energy suppliers alleviated if they make some effort to address what they owe. The overall unpaid bills have reached record levels, amounting to £4.4 billion, driven largely by rising energy costs.
The energy regulator, Ofgem, has proposed a plan that could see up to £500 million of this total written off early next year. However, this reduction would require an additional £5 to be added to everyone’s energy bills. Currently, households on a price cap tariff pay approximately £52 annually as part of their £1,755 yearly bill to handle historical debt.
Eligibility for the proposed debt relief includes individuals on means-tested benefits who accumulated energy debt over £100 between April 2022 and March 2024. Energy suppliers would identify these customers. To qualify, individuals would need to contribute partially to their debt repayment or to their ongoing energy costs. Those unable to pay would be required to seek assistance from a debt charity to manage their finances.
Recent data from Ofgem highlights that energy debt across England, Wales, and Scotland has increased by £750 million in the past year. As of this period, over one million households reportedly have no repayment arrangements in place for their debts. Ofgem is actively exploring various strategies to reduce this financial burden.
Additionally, a committee of MPs has suggested using the excess profits from energy network companies to clear some of this debt. They criticized the situation where households struggle to afford energy while these companies report significant profits. Ofgem acknowledged that this growing debt poses challenges both for affected households and for broader investment in the energy sector.
Ofgem is also considering measures requiring new tenants and homeowners to ensure they are responsible for their energy accounts, which could address a portion of the historic debt exempted by anonymous accounts. These suggestions aim to mitigate debt accumulation and provide support for vulnerable populations while distributing costs more evenly among bill payers.
Source: https://www.bbc.com/news/articles/c4gpzynky88o?at_medium=RSS&at_campaign=rss