The watchdog mentioned it was contemplating a one-off enhance within the value cap that might see households pay as much as £17 a 12 months extra – or £1.50 a month – on common “to reduce the risk of energy firms going bust or leaving the market as a result of unrecoverable debt”.
It warned that if it didn’t take motion, shoppers might face even increased prices and poorer requirements of service if suppliers collapsed as a result of debt ranges.
The regulator is consulting the power trade, shopper teams and the broader public to have a look at the choices.
But it mentioned, if authorized, any enhance to the cap could be delayed till subsequent April to guard shoppers from further prices through the winter.
Tim Jarvis, director basic for markets at Ofgem, mentioned: “We know that households across the country are struggling with wider cost-of-living challenges, including energy, so any decision to add costs to the price cap is not one we take lightly.
“However, the scale of unrecoverable debt and the potential risk of suppliers leaving the market or going bust, which passes on even greater costs to households, means we must look at all the regulatory options available to us.
“Ofgem cannot subsidise energy or force businesses to sell it at a loss and suppliers must be in a position to offer high-quality services to customers.
“We must consider the fairest way to maintain a stable energy market and we will do this in consultation with all our partners to ensure we are protecting the most vulnerable households.”
Ofgem mentioned that on the peak of the power disaster, when round 30 suppliers went out of enterprise, it charged each power buyer an additional £82 to cowl prices to make sure that households weren’t lower off.
It mentioned its newest proposals would have various impacts on buyer payments, relying on cost sorts.
But Simon Francis , coordinator of the End Fuel Poverty Coalition, mentioned the Government ought to as an alternative look to assist clients repay power money owed.
He mentioned: “Households are struggling under the huge weight of energy debt which has been caused through no fault of their own, but by rising prices.
“All this time, energy firms have continued to profit from the misery of people racking up debt and living in cold damp homes.
“Rather than pass on more increases to energy bills, the Government needs to work with energy firms to introduce a ‘help to repay’ scheme to help get Britain’s households back on to an even keel.”
