The U.K. energy regulator, Ofgem, is taking action to safeguard the energy market and protect consumers from the risks of mounting debt. To address this issue, Ofgem is exploring the possibility of implementing a one-time adjustment to the April price cap. This adjustment aims to mitigate the threat of energy companies going bankrupt or exiting the market due to insurmountable debt.
Several proposals are under consideration, each with varying impacts on customer bills depending on payment types. On average, customers can expect an increase of £17 ($20.93) per year across all payment categories.
The energy price cap serves as a benchmark for consumer payments on their energy supplier’s standard tariff, in the absence of the energy price guarantee.
Recent figures obtained by Ofgem revealed that energy debt has skyrocketed to an all-time high of £2.6 billion. This surge in debt is primarily attributed to rising wholesale energy prices and the broader financial strains of everyday living expenses.
To explore potential solutions, Ofgem intends to engage with industry stakeholders, consumer advocacy groups, and the general public through a comprehensive consultation process. Collaborative discussions will help determine the most equitable approach in safeguarding the stability of the energy market while prioritizing the protection of vulnerable households.
By undertaking this consultation, Ofgem aims to find the fairest means of maintaining a stable energy market that benefits all stakeholders. The organization remains committed to working closely with its partners throughout this process.
