Britain’s energy regulator has said it will almost double the allowance given to energy suppliers to recover some of the bad debt costs from the Covid-19 pandemic.
The move is expected to increase consumer bills.
The pandemic left many customers not being able to afford their energy bills in full – this led to additional debt-related costs for energy companies.
These debt-related costs have increased since Ofgem’s first estimates and therefore the regulator has decided to set an additional adjustment allowance worth £12.02, taking the amount to £30.01 per typical dual fuel credit customer.
This is expected to be recovered over 12 months from April 2023 to March 2024 through the price cap.
Ofgem said: “We have concluded that it is in customers’ interest to allow suppliers to recover the additional debt-related costs related to Covid-19 from April 2023. We consider that these costs were efficiently incurred due to the unforeseen and unprecedented impact of Covid-19 on some customers’ incomes.
“Our decision will help ensure that suppliers have the finances to continue to supply energy to their customers and fulfil their licence obligations.”