British Gas owner Centrica previously warned that banning the forced installation of prepay meters would lead to higher energy bills for all customers.
Ofgem said on Friday that the sheer scale of the £3bn debt pile, which equates to £103 for every UK household, could leave suppliers struggling to reclaim cash.
The extra £16 fee will be used to ensure suppliers can afford to support customers with measures such as setting up payment plans, writing off unmanageable debt on a case-by-case basis, and working out affordable repayment holidays.
An Ofgem spokesman household debts are likely to rise further over the winter.
The regulator said: “Since January 2023, the price cap has fallen from £2,500, under the Government’s energy price guarantee, to £1,928 from January 2024.
“However, energy prices are still high, and new figures published today show that energy debt has reached almost £3bn – its highest ever level – due to a combination of sustained high wholesale energy prices, and wider cost of living pressures, which have led to unpaid energy bills.”
Tim Jarvis, Ofgem’s director general for markets, added: “We know that cost of living pressure is hitting people hard and this is evident in the increase in energy debt reaching record levels.
“However, the record level of debt in the system means we must take action to make sure suppliers can recover their reasonable costs, so the market remains resilient, and suppliers are offering consumers support in managing their debts.”
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
