On Wednesday, a committee of MPs said this debt should be cleared using energy network companies’ “excess” profits.
In a report, the Energy Security and Net Zero (ESNZ) Committee called it “completely inexcusable” that households were forced to choose between eating and heating while companies behind Britain’s gas pipes and power lines amassed huge profits. It said these profits should fund a debt relief scheme.
Those windfall profits were partly the result of high inflation, but Ofgem said that renegotiating price controls would bring extra costs to consumers that would outweigh the benefits.
Charlotte Friel, from Ofgem, said the growing amount of energy debt was a “significant challenge” for those in debt as well as for households that face higher bills to cover debt that can’t be recovered. She said it also meant the industry was less able to invest because of the costs of debt.
Ned Hammond, from Energy UK, which represents suppliers, said the scheme was an “important first step” but would need to be expanded to meaningfully address the debt problem and reach a wider group of customers.
Charities said the move was long overdue, as families were still facing high energy bills, although some campaigners believe the industry should pay.
Adam Scorer, chief executive of charity National Energy Action, welcomed the plans, telling the BBC’s Today programme: “We’ve been waiting a long time for some serious action to intervene on this astonishing level of household energy debt.
“It’s not enough,” he added, “but it’s so great that we can see some serious attempt to shift this horrific burden off the shoulders of people who just cannot bear the weight”.
