Ofgem to increase Winter Price Cap to cover cost of people not paying their bills.

Mstty

This isn't really a surprise though is it. We knew the bad debt would have to be paid for.

Sort of non news really like any other business the losses are included in the price.

agentcain

The real question has been already asked though.
How much of this debt is actually due to people not being able to pay and how much because people won't pay. This matters.

matt_drummer

agentcain said:

The real question has been already asked though.
How much of this debt is actually due to people not being able to pay and how much because people won't pay. This matters.

Its a really difficult subject.

Many will argue that they don't have enough income and that other more important things take priority.

That may well be true, but how on earth do you assess if someone can't pay or if it is just that they won't pay.

I feel quite sorry for people that have to make these decisions and I feel sorry for an industry that is forced to continue to supply even if the customer doesn't pay.

I also feel sorry for the people that can't pay.

It's all wrong in so many ways, I don't have the answer and I suspect nobody else does.

dealyboy

matt_drummer said:

agentcain said:

The real question has been already asked though.
How much of this debt is actually due to people not being able to pay and how much because people won't pay. This matters.

Its a really difficult subject.

Many will argue that they don't have enough income and that other more important things take priority.

That may well be true, but how on earth do you assess if someone can't pay or if it is just that they won't pay.

I feel quite sorry for people that have to make these decisions and I feel sorry for an industry that is forced to continue to supply even if the customer doesn't pay.

I also feel sorry for the people that can't pay.

It's all wrong in so many ways, I don't have the answer and I suspect nobody else does.

In this day and age with 'benefits' and 'credits' plus 'cost of living payments', there is no excuse ... it's always a matter of choice!

Qyburn

matt_drummer said:

Many will argue that they don't have enough income and that other more important things take priority.

To a degree people might decide that other bills take priority, because they will still get their gas, electricity and water even if they stop paying. 

Spoonie_Turtle

dealyboy said:

matt_drummer said:

agentcain said:

The real question has been already asked though.
How much of this debt is actually due to people not being able to pay and how much because people won't pay. This matters.

Its a really difficult subject.

Many will argue that they don't have enough income and that other more important things take priority.

That may well be true, but how on earth do you assess if someone can't pay or if it is just that they won't pay.

I feel quite sorry for people that have to make these decisions and I feel sorry for an industry that is forced to continue to supply even if the customer doesn't pay.

I also feel sorry for the people that can't pay.

It's all wrong in so many ways, I don't have the answer and I suspect nobody else does.

In this day and age with 'benefits' and 'credits' plus 'cost of living payments', there is no excuse ... it's always a matter of choice!

This is just wrong.  Clearly you've not seen or understood the dire circumstances of the worst-off people, deep in poverty with no further help available.

I'm not saying that everyone struggling to live is at the most extreme end of the spectrum, but assuming benefit levels are adequate for every person/family is thoroughly ignorant.

dealyboy

Spoonie_Turtle said:

dealyboy said:

matt_drummer said:

agentcain said:

The real question has been already asked though.
How much of this debt is actually due to people not being able to pay and how much because people won't pay. This matters.

Its a really difficult subject.

Many will argue that they don't have enough income and that other more important things take priority.

That may well be true, but how on earth do you assess if someone can't pay or if it is just that they won't pay.

I feel quite sorry for people that have to make these decisions and I feel sorry for an industry that is forced to continue to supply even if the customer doesn't pay.

I also feel sorry for the people that can't pay.

It's all wrong in so many ways, I don't have the answer and I suspect nobody else does.

In this day and age with 'benefits' and 'credits' plus 'cost of living payments', there is no excuse ... it's always a matter of choice!

This is just wrong.  Clearly you've not seen or understood the dire circumstances of the worst-off people, deep in poverty with no further help available.

I'm not saying that everyone struggling to live is at the most extreme end of the spectrum, but assuming benefit levels are adequate for every person/family is thoroughly ignorant.

Thank you for your reply @Spoonie_Turtle ... just to lay down some facts ...

I am an OAP, I do not receive any 'benefits' or 'credits', I will receive the pensioner cost of living payment. I would be better off on 'benefits' and 'credits' plus the 'cost of living payment', I would receive housing benefit, council tax benefit, pension credit ... no I bought a cheap park home ... so no housing benefit, receive extra state pension ... so no pension credit, have some savings for future care ... rather taking from the state. I live off my state pension out of which I pay council tax and ground rent of £2,600 for the park home, I have reduced my energy usage by 2/3rds and got chilblains, but that is my choice, I paid my bills!

Spoonie_Turtle

dealyboy said:

Spoonie_Turtle said:

dealyboy said:

matt_drummer said:

agentcain said:

The real question has been already asked though.
How much of this debt is actually due to people not being able to pay and how much because people won't pay. This matters.

Its a really difficult subject.

Many will argue that they don't have enough income and that other more important things take priority.

That may well be true, but how on earth do you assess if someone can't pay or if it is just that they won't pay.

I feel quite sorry for people that have to make these decisions and I feel sorry for an industry that is forced to continue to supply even if the customer doesn't pay.

I also feel sorry for the people that can't pay.

It's all wrong in so many ways, I don't have the answer and I suspect nobody else does.

In this day and age with 'benefits' and 'credits' plus 'cost of living payments', there is no excuse ... it's always a matter of choice!

This is just wrong.  Clearly you've not seen or understood the dire circumstances of the worst-off people, deep in poverty with no further help available.

I'm not saying that everyone struggling to live is at the most extreme end of the spectrum, but assuming benefit levels are adequate for every person/family is thoroughly ignorant.

Thank you for your reply @Spoonie_Turtle ... just to lay down some facts ...

I am an OAP, I do not receive any 'benefits' or 'credits', I will receive the pensioner cost of living payment. I would be better off on 'benefits' and 'credits' plus the 'cost of living payment', I would receive housing benefit, council tax benefit, pension credit ... no I bought a cheap park home ... so no housing benefit, receive extra state pension ... so no pension credit, have some savings for future care ... rather taking from the state. I live off my state pension out of which I pay council tax and ground rent of £2,600 for the park home, I have reduced my energy usage by 2/3rds and got chilblains, but that is my choice, I paid my bills!

There is unfortunately a gap between the benefits thresholds and where income is above that threshold where people are not actually better off, and those people can indeed struggle.  (Universal Credit actually was designed as more of a taper than the sharp cliff-edge of legacy benefits, so it narrows that gap a little.)  But I don't think you actually understand the reality for a lot of working-age people where benefits are literally less than half of what pension-age benefits are.

If you were a working-age single person with no children, would you really be able to survive on £334.91 per month, out of which you would also have to find either the mortgage payment or the rent shortfall - *whilst trying to find work and attend interviews, travel to Jobcentre appointments, etc.*?!  Or even better if you're under 25, £265.31 per month.

Or if you're a statistically average single disabled person with an extra £583 of costs per month in 2019 (adjusted for inflation, now £696.83) with the spending power 68% of that of a nondisabled person; let's say you get enhanced PIP both elements - except your car has to be from Motability because you needed it adapted and Motability was the only way to afford it, OR you don't need it adapted but you weren't able to save up to buy one outright.  Let's also say you get the maximum UC, although the majority don't, but we'll be generous here.  So you have an income of £334.91+£354.28 UC + £400.40 PIP = £1084.59 per month.  Except £696.83 of that goes on extra expenses of being disabled, so you're left with £392.76, and remember you probably still have a rent shortfall to pay out of that, you are not well enough to work to increase your income, you can't cook meals from scratch with ingredients from the reduced section because both the shopping for those ingredients and the cooking takes energy and ability you don't have, and you physically and/or cognitively can't do most of the usual moneysaving strategies that people need to survive on a tight budget.  Oh, and if your purchasing power really is 68% of that of a nondisabled peer, you're actually working with £267.08 anyway.

I know pensioners are often held up as one of the most vulnerable groups of people, especially when it comes to energy, but the amounts above are the reality for the level of income working-age people are expected to survive on.  Pension Credit for a single person works out at £791.27 per month, more than double the working-age standard allowance for single over 25s (and over three times as much as a single working-age disabled person may effectively be left with).


*Note: amounts used are based on 2022/23 benefit rates as nobody will see the catch-up increase for inflation until May.

^Second note, State Pension is actually a benefit, a contributory one - a little bit like New-Style JSA or ESA but more generous than those two, not means-tested in the slightest, and with no time limit.


Edit: UPDATE for future readers https://www.scope.org.uk/campaigns/extra-costs/disability-price-tag-2023/

Scope's latest report shows the Disability Price Tag for 2019/20 was £975/month, which adjusted for inflation in early 2023 is equivalent to £1122 - *before* the benefit rises kick in (to catch up with inflation, not get ahead of it).
For full context, the new benefit rates for somebody claiming the maximum UC and PIP, and not using the mobility component for Motability, work out at £1507.38/month.  Leaving the nondisabled equivalent of £385.38, again with a likely rent shortfall and all the other qualifiers above.

[Deleted User]

As I said in an earlier post, making consumers who have stayed with a main energy supplier for decades pay for the failure of energy companies; pay towards the credit balance protection of others, and now contribute towards the debts of others is fundamentally unfair. 

Arguably, those who pursued cheap energy prices should have picked up the additional cost of their energy supply provided by the SoLR, and they should have lost their credit balances. The SoLR/Consumer Levy process was never designed for suppliers going over the cliff like Lemmings: it was designed for an occasional supplier failure. 

That said, many of the supplier failures could have been avoided had the Government (yes, Ofgem is the Government) raised the Cap 18 months ago when energy wholesale costs started to rise. This, however, didn’t suit the Government narrative that its actions were protecting consumers from higher energy bills. Look at how that is working out.

The rationale for allowing suppliers to recover debt via standing charges is to protect Ofgem from the inevitable fallout if more energy suppliers fail. Look at how improved Ofgem regulation is working out: a headline in today’s DT suggests that suppliers are holding on to credit balances in excess of £400 for millions of customers. Ofgem is on record as saying that better regulation would prevent this from happening: Citizens Advice and others had serious doubts.

Ofgem is always late to the party. In my view, credit balances in excess of one month’s DD payment or one bill for those who pay charges as they arise should be held in legal escrow.

Bigphil1474

Time will tell if they end up actually paying the same or not - paying the same unit rates is not the same as saying PP meter customers will pay the same amount for like for like consumption compared to credit meter customers. Perhaps they'll increase the standing charge on PP meters, or add a transaction fee for topping up etc. Call me a cynic but can't see the energy companies actually doing the right thing on this issue.