- Charity organization Warm This Winter warns of an impending increase in energy bills
- Energy bills are falling overall, but businesses are free to charge an extra £25 to £129
- These costs go towards dealing with bad debts, including forced meter installations
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Some households could soon find themselves paying as much as £129 to cover the cost of unpaid gas and electricity bills, a charity has warned.
According to a report from Warm This Winter, energy companies have charged customers £842 million this year to cover ‘bad debts’ or unpaid energy bills from other homes.
But this will rise by a further £735 million to £1.3 billion from April 1, as energy regulator Ofgem will increase the amount gas and electricity companies can charge for this.
How much each household will pay for these costs depends on how they are billed.
Going for the blunder: Campaigners say energy companies are actually charging households more to chase up unpaid debts of households who can’t afford to pay sky-high energy bills
From April 1, meter customers will now pay the least, at £25.17 per household per year.
Customers on direct debit pay £38.96 per year, but customers on standard credit are hit much harder and typically pay £129.71.
These are customers who pay on the go with a card or check.
This levy covers unpaid bills, the costs of collecting these types of debts and a cash cushion for energy companies to bridge them between incurring costs and getting paid by customers.
These fees also include the costs for energy companies of the ban on controversial meter installations with forced prepayment.
Fiona Waters from the Warm This Winter campaign said: ‘Utility bill payers are rightly up in arms about these extra charges, which don’t look like they are reducing ordinary people’s debts but instead are helping energy companies chase those who simply be able to. do not pay.
“It’s yet another outrageous rip-off caused by our broken energy system, where ordinary people are expected to constantly pay the bill while energy giants pocket billions and their bosses live in luxury.”
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: ‘The energy debt recovery led to the forced prepayment meter scandal in 2023 and customers are still paying the price for energy companies’ bad practices.
‘Rather than hitting hard-pressed households with higher fixed costs, we need to see a longer-term approach to solving the mountain of energy debt, such as a sector-wide Help To Repay scheme.
‘If Ofgem continues to pursue this charge, the least they can do is ensure it is used to write off debts from customer accounts and not spent on hiring debt collectors.’
Despite increases in energy costs to cover unpaid bills, these bills are slowly declining overall, although they are still high by historical standards.
The average price cap bill for two fuels is £1,928 per year, falling to £1,690 per year from April 1.
An Ofgem spokesperson said: ‘We need to address the risk posed by persistently high debt levels in the system, so we need to introduce a temporary payment to help prevent an unsustainable situation from leading to higher bills in the future.
‘This highlights the limitations of the current system – we can only shift costs – and although prices are slowly falling as the energy market stabilises, many people are struggling to pay their energy bills amid unprecedented debt levels and the legacy of this risks change. an ongoing problem.
‘We have already taken action: changing fixed costs for PPM customers so they don’t have to pay more than anyone else, and increasing requirements on suppliers to take care of their customers, but a longer-term solution requires that we take a step back and see the big things.’ picture That is why we have launched a call for ideas about affordability.’