Further Energy Price Cap Rise Coming?

In Cost of Living news, Ofgem has announced that it is proposing lifting the energy price cap further, by £16, between April 2024 and March 2025. This comes as debt levels for energy customers have risen to £2.9bn.
 
The price cap is already due to increase from January 2024, meaning a typical household will pay £1,928 per year for their electricity and gas, an increase of £94 from the current £1,834.

Ofgem have said that “We understand the distress that rising debt in energy has on people… [but] rising debt levels create costs for suppliers”.

This increase would not affect those customers with prepayment meters, as they cannot build up debt like a monthly-billed household.

This comes as charities have warned that millions of people are having to borrow money to pay essential bills at Christmas. Arrears on gas and electricity accounts has increased to £2.9bn between July and September 2023 from £1.9bn in the same period in 2022.

Some £2bn of that figure is made up of customers who have not worked out a repayment plan with their supplier.

National Energy Action, a fuel poverty charity, said that “There is now a desperate need for the UK government to step in and to help low-income households clear their debts and make sure bills are affordable. People are already going without energy, heat and light and it's not enough to stop their debt rising. It's going to be a bleak and cold Christmas for millions.”

Ofgem claim the increase is to attempt to prevent increased levels of bad debts, which could mean that customers end up paying more back in the long run.

The Department for Energy and Net Zero have said that “We recognise the cost-of-living challenges families and households are facing. We expect energy suppliers to help customers who are struggling with energy costs, prioritising support for the most vulnerable… That's why we're spending £104bn to support households with all their bills - including targeted support for the most vulnerable. Bad debt can push up bills for everyone and Ofgem has a responsibility for setting the level at which suppliers can recover costs they incur.”

It's not just those struggling financially that are having problems with their energy bills, though. Sir Grayson Perry, the Turner Prize-winning artist, has criticised EDF Energy, who have attempted to take a £39,000 direct debit from his account, rather than the usual £300 per month he normally pays, and he’s not alone. This can be due to a potentially-erroneous meter reading being recorded on their system, EDF have said.