OFGEM Announcement - Is That Even Legal?

Sterlingtimes

I remember a utility paying into a charity to help people who could not or who chose not to pay their bills. The charity could settle the bills. Obviously, every paying customer contributed to the charity without knowing it. The charity route must have been tax-efficient.

ArbitraryRandom

MattMattMattUK said:

It has already been pointed out that dropping the standing charge would not make sense, even those on pre-payment are still connected to the grid, still have to contribute to the majority of it's costs, it could be argued that they should be excluded from the bad debt levy, but then many pre-payment customers have debts on their meters which will ultimately have to be written off as bad, so it would be an irrational move.

This is the bit in the proposals I've read that makes little sense to me - the idea that the charge won't be levied on pre-pay because they can't accrue debt... when a reasonable number of pre-pay meters are installed as a result of debt. 

I can only assume the 'logic' is that those people are already repaying debt so the levy would be taking from them twice?
Or something about the administration of debt which means pre-pay debt is handled differently?
Otherwise I'm guessing ideological - that people on pre-pay tend to be lower income households.  

We propose to set the adjustment using a lower quartile benchmarking approach and recover the costs equally over direct debit and standard credit customers (no adjustment to prepayment meter customers). This would result in a £16 dual fuel bill increase for those customers affected.