Ofgem has today (Monday 11 March 2024) published a call for input to
examine issues around affordability and debt in the energy
market.
Ofgem’s first responsibility is to protect consumers, and we
remain very concerned that struggling households have a limited
ability to cope with future price shocks. At the same time, the
cost of recovering bad debts, and the high number of consumers
who are locked into debt and repayment plans, could have serious
consequences for the retail energy sector.
Additionally, to meet the affordability challenge and achieve our
net zero goals in the long term, we need to rebuild our energy
system around cleaner, affordable, and secure source of low
carbon and renewable energy. This will require significant
investment, and to the extent these costs go on to bills, the
risk is that short-term costs could disproportionately hit lower
income consumers that are not able to invest in the technologies
or change behaviours to reduce costs without further action.
To further examine issues around affordability and debt, we are
issuing this Call for Input to work out the steps we need to take
to guard against the harmful impacts of future price shocks, to
ensure that the debt burden doesn’t leave us with an
unsustainable situation which will lead to higher bills in the
future, and to look at how we can better support consumers now
and in the future as the market evolves.
The call for input will be open until Monday 13 May, 2024.
To aid your coverage please see the following statement:
Tim Jarvis, Ofgem’s Director General for Markets,
said:
“Prices are slowly falling as the energy market stabilises – but
many people have been struggling to pay their energy bills
amid unprecedented levels of debt and the legacy of this risks
becoming an enduring problem.
“There have been numerous interventions to support different
groups of customers, but a longer term solution requires us to
take a step back and see the big picture which is why are
launching this call for input on affordability. We need to look
at energy affordability as a whole – what’s working, what is not
and where are the gaps.
“We have taken action already – changing standing charges for PPM
customers so they are not charged more than anyone else and
toughening up requirements on suppliers to take care of their
customers.
“However, the growing level of debt means a longer term approach
is needed to ensure we have a stronger market and the right
support for struggling consumers to protect them from future
price shocks and ensure all consumers benefit from the transition
to a new cleaner, more secure energy system.”
