Is it April Fools day already?

maxmycardagain

Ofgem plans to add £16 to energy bills to help suppliers recover £3bn in bad debts

Extra payment would be levied at £1.33 a month between April next year and March 2025

The energy watchdog has set out plans that would result in households paying an extra £16 on top of their energy bills to help suppliers recover almost £3bn in bad debts from customers struggling to pay bills.

Ofgem said the one-off extra charge, which would be levied at £1.33 a month on bills paid between April next year and March 2025, was to “protect the market and consumers” after figures showed energy debt had hit a record £3bn.

The level of bad debt, which refers to the amount of money owed by customers that is unlikely to realistically be repaid, has soared because of increases in wholesale energy prices and the wider cost of living crisis putting pressure on household finances.

“We know that cost of living pressure is hitting people hard and this is evident in the increase in energy debt reaching record levels,” said Tim Jarvis, the director general for markets at Ofgem.

1. Prepayment customers cannot owe any debt

2. Direct debit customers mothly amounts are set to cover winter bills

3. Many customers have hundreds if not thousands in credit taken by DDM, who gets the interest

4. Energy companies are making record profits

TadleyBaggie

Already a thread on this issue: https://forums.moneysavingexpert.com/discussion/6493534/ofgem-announcement-is-that-even-legal

Krakkkers

When was the last time one of these additions to the standing charge was removed?

MattMattMattUK

maxmycardagain said:

Ofgem plans to add £16 to energy bills to help suppliers recover £3bn in bad debts

Extra payment would be levied at £1.33 a month between April next year and March 2025

The energy watchdog has set out plans that would result in households paying an extra £16 on top of their energy bills to help suppliers recover almost £3bn in bad debts from customers struggling to pay bills.

Ofgem said the one-off extra charge, which would be levied at £1.33 a month on bills paid between April next year and March 2025, was to “protect the market and consumers” after figures showed energy debt had hit a record £3bn.

The level of bad debt, which refers to the amount of money owed by customers that is unlikely to realistically be repaid, has soared because of increases in wholesale energy prices and the wider cost of living crisis putting pressure on household finances.

“We know that cost of living pressure is hitting people hard and this is evident in the increase in energy debt reaching record levels,” said Tim Jarvis, the director general for markets at Ofgem.

1. Prepayment customers cannot owe any debt

Yes they can be in debt to their energy provider.

maxmycardagain said:

2. Direct debit customers mothly amounts are set to cover winter bills

In theory, some are set too high, some are set too low, others are adjusted to be too low by consumers.

maxmycardagain said:

3. Many customers have hundreds if not thousands in credit taken by DDM, who gets the interest

Many customers are hundreds, if not thousands of pounds in debt. Lots of energy debt is unrecoverable. Any credit balances will sit within the overall operating budget, they are not sat in a savings account earning interest.

maxmycardagain said:

4. Energy companies are making record profits

Some companies in some parts of the energy sector are making higher than normal profits, but those are largely multinational energy extractors making profits on their overseas operations. Some UK generators are making higher profits, mostly renewable and nuclear, gas generators are making about the same, energy suppliers are making less than their historical averages and were forced for a period of twelve months to sell energy below cost, which is why so many of them went bust.

Hoenir

maxmycardagain said:

4. Energy companies are making record profits

The energy transition has to be paid for. Profits get reinvested. That's how a business grows incrementally over time. Upgrading the network infrastructure to cope with "electrification" is a mammoth task. 

The Middle East invests their profits into Premier League football clubs, World Golf, Formula One etc. No benefit to anyone. 

tifo

Hoenir said:

The Middle East invests their profits into Premier League football clubs, World Golf, Formula One etc. No benefit to anyone. 

To the shareholders yes but also for running costs such as wages, which means jobs and tax revenues for govt, bills etc and overall running of a business from which others than shareholders will benefit, such as the local economy.

The football clubs, golf clubs, racing etc are free to refuse Middle East investment and the govt could always block the deals, like they do sometimes.

Archerychick

This is a proposed change and is out for consultation until 17th January

https://www.ofgem.gov.uk/publications/energy-price-cap-additional-debt-costs-review-consultation