Warm This Winter charity warns of increased energy debt charges for households as firms prepare to raise £735 million from 1st April to cover unpaid bills, totalling £1.3 billion.
Standard credit customers could face a yearly charge of £129, significantly higher than prepayment meter and direct debit customers.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “The recovery of energy debt led to the forced prepayment meters scandal in 2023 and customers are still paying the price for energy firms’ poor practices.
“Rather than hit hard-pressed households with higher standing charges, we need to see a longer-term approach to solving the energy debt mountain, such as an industry wide Help To Repay scheme.
“If Ofgem persists in implementing this charge, the very least they can do is ensure it is used to write off debts from customer accounts and isn’t spent on hiring debt collection agencies.”
Fiona Waters, from the Warm This Winter campaign, said: “It’s yet another outrageous rip-off caused by our broken energy system, where ordinary people are expected to foot the bill all the time whilst energy giants bank billions and their bosses live in the lap of luxury.”
Yesterday, Ofgem released a discussion paper today, detailing potential reforms to the price cap mechanism.
The paper presents various options, including proposals for a more dynamic pricing structure.
This could involve implementing time-of-use dependent unit rates, to encourage consumers to modify their energy usage patterns, especially during peak periods.