Energy debt crisis may add extra costs to household bills

HOUSEHOLD energy bills could rise by at least £75 a year to cover unpaid debts from customers who do not pay suppliers, according to EDF.

The energy supplier, which has five million customers, said household debt was “out of control” and could reach £7bn next year during the cost of living crisis and an “emerging culture of non-payment”.

EDF said debt-related costs already add about £60 to annual energy bills, reported The Telegraph. It warned that if debt reaches £7bn, a further £10 to £15 a year may need to be added to bills.

The warning comes before Ofgem announces its new energy price cap on Wednesday. The increase is expected to add about £200 to average annual household bills, taking them to £1,850.

EDF said current regulations had made it easier for customers to fall into debt and harder for suppliers to recover payments. The company said some protections for vulnerable consumers were also shielding customers “who can and should pay”.

Tim Jarvis, Ofgem’s chief executive, is planning a scheme to write off up to £400m of debt built up during the last energy crisis, reported The Telegraph. Earlier this month, he 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.”

National Energy Action and Citizens Advice said rising debt was mainly caused by households being unable to afford bills. National Energy Action said many households were already on “negative budgets”.

A government spokesman said: “Ofgem is considering a range of options to reduce energy debt in the system and we are working with them.”