The amount of money British households owe their energy suppliers soared to a record 2.6 billion pounds ($3.2 billion) this summer due to soaring wholesale energy prices and rising living costs. With bad debt levels expected to continue rising, UK regulator Ofgem said on Thursday it was considering a one-off change to the energy price cap in April to reduce the risk of suppliers going bust or leaving the market because they cannot collect their debts. The proposals being considered would add an average of £17 to all bills.
Clare Moriarty, chief executive of Citizens Advice, said: "Worryingly, more households are building up energy debt during the warmer months, with some having to borrow to keep their lights on. Raising the price cap in order to pay for higher debt will make families' bills even harder to bear."
Energy bills in the UK fell slightly in October, but households could still face rising costs in the coming months as UK government subsidies are phased out. Estimates suggest a third of households will pay higher bills, putting pressure on the government to do more to help offset pressure on the cost of living.
Ofgem will now consult industry, consumer groups and the public. Lawmakers and energy suppliers have been calling for the introduction of social tariffs to lower bills for vulnerable customers. In response, 14 energy suppliers have pledged immediate assistance to indebted households, including "substantial" additional financial support, according to EnergyUK, a lobby group. The group is calling on the government to commit to targeted financial support for families this winter, including means-tested and disability benefits.
Daniel Portis, deputy director of Energy UK, said: "We cannot solve this problem alone. Even with a variety of support options offered by providers, many customers may struggle to pay their energy bills."