Energy bills could rise by as much as £75 a year for millions of households to help cover the cost of unpaid customer debts.
One of Britain’s largest suppliers has warned that the country’s growing energy debt crisis is pushing up costs for paying customers.
EDF, which supplies electricity to around five million customers across Britain, said household energy debt is now “out of control” and could reach £7billion next year.
The company warned that customers who pay their bills are already covering around £60 a year in debt-related costs through their energy charges.
Industry estimates suggest that if total household energy debt rises to £7billion, this could add a further £10 to £15 to annual bills, taking the total burden to as much as £75.
The warning comes ahead of Ofgem’s latest energy price cap announcement on Wednesday.
The cap is expected to increase average household bills by around £200 to £1,850 a year, offering little relief for consumers already facing high energy costs.
EDF blamed successive governments for failing to tackle the issue, arguing that weak regulation has allowed non-payment to become increasingly common.
In a report published today, the supplier said: “The current regulatory framework has failed to keep pace with the problem.
“It has made it far too easy for consumers to get into debt and ever more difficult for suppliers to do anything about it.”
EDF sounds alarm as unpaid energy bills could hit £7billion
|
GETTYThe company also claimed that years of political inaction have contributed to what it described as an emerging “culture of non-payment”, making it more socially and culturally acceptable for some households to avoid paying their energy bills.
Ofgem chief executive Tim Jarvis is developing a relief scheme to cancel up to £400m in debt from the previous energy crisis, though critics consider this insufficient.
In a recent speech, Jarvis said: “Energy cannot become a source of free or cheap credit by default. We need to open the discussion about resetting the social contract on energy debt.”
Charity groups disputed EDF’s characterisation of the problem, pointing instead to fundamental affordability issues.
EDF blamed successive governments for failing to tackle the issue
|
GETTYNational Energy Action, which specialises in assisting households with energy debts, said: “Frontline evidence shows that arrears are primarily driven by sustained unaffordability rather than disengagement.
“Households fall into debt where incomes, essential costs and energy needs cannot be reconciled.”
The organisation added that many families they support operate on negative budgets, with nothing remaining after covering rent, food and essentials.
Citizens Advice described the crisis as “no longer a temporary challenge but a structural threat to many household budgets.”
Energy consultancy Baringa warned that Wednesday’s expected price cap rise would trigger a further surge in unpaid bills
|
GETTYHowever, Energy UK’s Ned Hammond argued that current regulations make falling into arrears too easy, suggesting faster account setup for new movers and expanded use of Smart Pay As You Go meters as potential remedies.
Energy consultancy Baringa warned that Wednesday’s expected price cap rise would trigger a further surge in unpaid bills.
James Cooper from the consultancy said: “For the most vulnerable, who are already in a position where they can’t pay, this simply means more debt. A rise in the price cap just like any additional cost faced by the country’s poorest will result in an increase in debts.”
The anticipated £200 increase is expected to compound difficulties for both struggling households and energy suppliers alike.
A Government spokesman responded to the mounting concerns by stating: “Ofgem is considering a range of options to reduce energy debt in the system and we are working with them.”