Octopus Energy has publicly opposed a proposal by regulator Ofgem to introduce an allowance in the price cap that would see bills increase.
Britain’s third largest supplier dubbed the proposals that would aim to protect energy companies from consumer-linked bad debt as “flawed”.
“Octopus Energy wishes to make clear that it does not support this proposal,” the company said.
“It considers the proposed implementation to be flawed and that it would reduce the incentive on suppliers to manage debt effectively.”
Ofgem’s proposal would see a 12-month allowance added to the default tariff cap for pre-payment meter customers in order to provide suppliers with extra money to cover costs from those unable to pay bills.
Ofgem determines how much suppliers can charge customers per unit of energy through the cap, with British Gas unveiling bumper half-year profits on Thursday largely due to other allowances designed to ensure earnings.
Octopus added it would “not support any supplier levy or reconciliation mechanism” to ensure payments, given the move could “introduce moral hazard”.
Energy suppliers were estimated to have incurred £1.3bn of costs from customer bad debt between 2022 and 2023 and Ofgem’s proposal has received extensive support from other firms.
Many of these use Ofgem’s price cap – which is designed to be a maximum – to determine tariffs, sparking outrage on Thursday given British Gas’s 889% rise in half-year profit while many struggle to pay bills.
Octopus itself charges similar to Ofgem’s price meanwhile, with the firm’s flexible tariff estimated to cost £2,039 annually for a house in London, as per its website, compared to the current cap of £2,074.