Category: Forex News

UK’s Ofgem Seeks Opinions on Record £3.1Bn Unpaid Energy Bills LeapRate

On Monday, the UK’s energy watchdog, Ofgem, initiated a consultation to solicit ideas and strategies for safeguarding consumers from the ongoing burden of high energy costs while also addressing the escalating concern of an unprecedented £3.1 billion (approximately $3.98 billion) in accumulated unpaid energy bills.

Despite a recent downtrend in energy prices, the financial strain on numerous households persists, with Ofgem reporting a notable increase in consumer debt related to energy bills last month.

Tim Jarvis, the Director General for Markets at Ofgem, highlighted the severity of the situation, stating, “The challenge of managing energy bills has reached critical levels for many, with debt reaching unprecedented heights. The aftermath of this situation threatens to leave a lasting impact, perpetuating the cycle of financial difficulty.”

Currently, Ofgem enforces a price cap to mitigate the financial burden on consumers, but the cap experienced a significant hike, reaching £3,549 annually for an average household in October 2022. This surge was primarily due to the global spike in wholesale energy prices following the geopolitical tensions triggered by Russia’s invasion of Ukraine, with the cap peaking at over £4,000 in January 2023.

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In response to the skyrocketing costs and to alleviate the financial pressure on households, the government subsidised energy bills, capping them at £2,500 per year for average consumption until the end of June 2023. At that point, Ofgem’s cap was adjusted to fall below this threshold.

Recognising the need for more targeted support, Ofgem has proposed the idea of a social tariff for household energy aimed at offering reduced rates to the most vulnerable segments of the population and those least capable of covering their energy expenses. However, implementing such a tariff would fall under the purview of the government.

To gather comprehensive insights and solutions, Ofgem has set a May 13 deadline for feedback from various stakeholders, including consumers, energy suppliers, consumer advocacy groups, charitable organisations, and debt management firms. This collaborative effort aims to explore practical measures to alleviate the financial strain on consumers and tackle the growing issue of energy debt in the UK.

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