Octopus has called on the energy regulator to ditch payment penalties for standard credit customers.

People who are not on direct debit plans see up to £254 added to their energy bills, more than three times extra what they were in April 2021, when the additional fee was around £84.

It is estimated that the surplus charges leave nearly five million homes paying around £1.3 billion more a year.

Octopus Energy Chief Executive Officer Greg Jackson said: “Whilst the global gas crisis is beyond the control of the UK, Ofgem need to do all in their power to drive down the sinister, hidden costs creeping up on pensioners.

“Committing to review it only by the winter of 2024/25 is simply not soon enough.”

Yesterday, during a session at the Business Energy and Industrial Strategy Committee, Ofgem’s chief Jonathan Brearley hinted at possible measures to close the gap between the cost of energy bills for prepayment customers and those on direct debits.

Mr Brearley said that Ofgem was “examining whether there’s a case for a cross-subsidy – he said: “I don’t want to overpromise on that because it’s complex and you would need transfers between companies as there are companies in the market who just have prepayment meters.

“If a levelised price would mean they weren’t able to recover their costs, we would have to find some way to make that good and it’s that we’re looking at.”

ELN has approached Ofgem for comment.