Energy regulator Ofgem has laid out new rules designed to ensure suppliers have “no excuse” not to support the most vulnerable customers this winter.
Ofgem proposed on Wednesday an allowance be added to the pre-payment meter price cap, following a consultation sparked by British Gas’s forced-fitting of the meters in vulnerable homes.
This would aim to cover suppliers’ bad debts associated with offering additional support credit, which they are often obliged to give vulnerable customers on pre-payment meters.
“Some of this credit may not be repaid,” Ofgem strategy director Neil Kenward warned, “but energy suppliers do not currently get compensated for this cost”.
“The allowance aims to fix that,” he continued, “ensuring suppliers have no excuse not to offer additional support credit to customers in need this winter”.
Adding the allowance to the price cap, which determines how much suppliers can charge for energy, would see individual bills increase by £13 to £16 a year for pre-payment customers, Ofgem said.
This would grant suppliers an addition £300mln and £360mln on an annual basis, with companies facing a £25mln and £30mln increase in bad debt in February and March respectively.
“Credit helps some of the most vulnerable pre-payment meter customers by providing them with additional respite,” Kenward added.