What Ofgem can, and should, do to support people with energy debts
Our Chair Adam Sharples CB on why Ofgem needs to provide more protection for people with energy debt
Posted August 5, 2022
Our Chair, Adam Sharples CB, shares our joint energy briefing (written with Citizens Advice and StepChange Debt Charity), and outlines why Ofgem needs to provide more protections for people with energy arrears.
Rising energy bills are rightly getting a lot of media attention as households grapple with the increasing cost of living.
We are all facing higher energy costs, but for people on the lowest incomes these rises could have a devastating impact.
Recent findings by Legal & General show that more than a quarter of people with incomes below £20,000 are worried they won’t be able to cope with higher bills. This reflects what our advisers are hearing at National Debtline and Business Debtline. At National Debtline, energy arrears are now the most common debt type amongst the people who contact the service (32%), up by ten percentage points since 2021.
Findings from other debt advice charities paint a similarly worrying picture. Energy debt overtook council tax in 2021 as the most common issue amongst people contacting Citizens Advice. And in the first three months of this year, one in four people who got in touch with the charity needed advice on energy debt.
With the energy price cap set to rise even higher in October and inflation continuing to increase, StepChange Debt Charity estimate that the people they help who receive Universal Credit will face an average monthly deficit of £77.
All of this points to a concerningly high number of people falling behind on their energy bills during the cold winter months. And while the Government support package announced so far is welcome, more protections are needed for those households for whom this will be an incredibly challenging time.
Along with StepChange Debt Charity and Citizens Advice, we believe there is more that Ofgem can and should do to protect customers who fall into arrears. We are jointly calling for urgent action from the regulator to protect people who cannot afford their bills, and make payments on energy arrears. I have written to the Chair of Ofgem on behalf of the three charities, to highlight the need for action and to share our briefing, calling on the regulator to:
- Publish guidance to energy companies to ensure people who fall into arrears are treated fairly and are not asked to repay amounts they cannot afford;
- Protect customers in financial difficulty from potentially harmful debt collection practices; and
- Work with suppliers to keep customers with prepayment meters on supply this winter, including a temporary commitment to halt disconnections and forced installation of prepayment meters for debt.
Without this protection, many would face yet higher bills under prepayment meters, and some could self-disconnect to stop their costs spiraling.
Like the Government, Ofgem has a vital role to play in protecting people who will inevitably fall into energy arrears this winter – and we look forward to working with the regulator to ensure these protections are put in place as soon as possible.
Read our full joint briefing: Rising energy prices: Protecting energy customers in debt.
Adam Sharples CB is Chair of the Money Advice Trust. View all posts from Adam Sharples.
