The UK Office of Gas and Electricity Markets (Ofgem) has proposed reforms as household energy debts in the UK have reached £4bn ($5.1bn).
The regulator suggests changes in how companies manage customer debts, including offering tariffs without certain charges.
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The move comes as energy debts have surged by 91% since 2022, reaching £3.82bn ($4.87bn) in September 2024, according to a report by Reuters.
The Labour government has pledged to enhance living standards across the UK by the end of the current parliament, which potentially extends to 2029, and has set a key focus on reducing domestic energy costs.
According to the report, despite a drop in home energy bills under Ofgem’s price cap following Russia’s invasion of Ukraine in 2022, prices remain 40% higher than pre-crisis levels, posing challenges for vulnerable households.
Ofgem director general of markets Tim Jarvis said: “Ofgem has set out plans to increase and standardise the support people struggling with energy debt will receive, as well as options for practical help for those households who are in real difficulty.”
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By GlobalDataProposed changes include new rules for consistent assessment of customers’ payment abilities and enhanced support.
Ofgem also suggests that suppliers offer tariffs without standing charges – fixed daily fees that cover the costs of connecting to the energy system.
Consumer groups argue these charges are unfair as they apply regardless of energy usage.
Jarvis added: “We want to give consumers the ability to make the choice that’s right for them … and by having a zero standing charge tariff, we would create that choice for everyone.”
Ofgem plans to consult on the changes, aiming for standing charge-free tariffs by next winter.
Ofgem has recently introduced the Advanced Procurement Mechanism, a new investment fund to expedite the UK’s transition to net zero.
The fund, estimated to be between £5bn ($6.3bn) and £8bn, aims to reduce delays and control costs by allowing early procurement of key equipment for energy transmission projects.
APM would enable transmission owners to secure essential components such as switchgear, cables and steel ahead of finalising project details.
