Energy price cap could rise by £16 to help suppliers cover customer debts

The UK's energy watchdog has said it will lift the energy price cap from April next year to help suppliers recover almost £3 billion in debts from customers who cannot pay their bills.

The one-off price cap adjustment will add up to £16, which will increase gas bills by around £1.33 a month on average, Ofgem said.

The watchdog said energy companies should use the extra money to support struggling customers and to write off bad debts.

Customers using pre-payment meters will not be affected.

Energy prices were already set to remain high over the winter amid wider cost-of-living pressures. Energy debt has reached almost £3 billion, which is the highest level ever, Ofgem said.

Last month, Ofgem changed the price cap from the current £1,834 for a typical dual fuel household to £1,928 from January 1.

Tim Jarvis, director general for markets at Ofgem, said the watchdog did not take the decision lightly.

“This approach will ensure the costs are recovered fairly, without penalising a particular group of customers.

“The price cap has helped to protect consumers from a volatile gas market.

“However, it remains a blunt instrument in a changing energy sector and the way it works may need to change in the future, so customers continue to be protected.”

The changes come as more than a quarter of people are worried about affording Christmas, according to data by the Office for National Statistics.

Some 28% of people surveyed said they were worried about how they were going to pay for the festive plans, while almost half said they would be spending less on Christmas food and presents.

Energy prices spiked as a result of Russia's full-scale invasion of Ukraine in February 2022.

The conflict prompted European countries to sanction and restrict Russian gas supplies, driving up prices for the average consumer.

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