Ofgem to almost double Covid cost allowance for energy suppliers

The move is expected to recover some of the energy debt created during the pandemic

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.”

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