The UK’s energy watchdog has unveiled plans to lift the energy price cap from April next year in order to help suppliers recover nearly £3billion in bad debts from customers struggling to pay bills.
Ofgem said it is proposing a one-off price cap adjustment of £16, equivalent to about £1.33 a month, to be paid between April 2024 and March 2025.
It comes as energy prices stay high and debt has reached its highest-ever level, according to new figures from the regulator.
Last month, Ofgem set the price cap from the current £1,834 for a typical dual fuel household to £1,928 from January 1.
Tim Jarvis, Director General for Markets at Ofgem, said: “The proposals set out today are not something we take lightly. However, we feel that they are necessary to address this issue.
“This approach will ensure the costs are recovered fairly, without penalising a particular group of customers. The price cap has helped to protect consumers from a volatile gas market.
“However, it remains a blunt instrument in a changing energy sector and the way it works may need to change in the future, so customers continue to be protected.”
