In a recent Ofgem consultation, energy supplier Octopus expressed concerns over the possibility of a price cap increase to account for potential “bad debt costs” from prepay meter customers.

Last month, Ofgem initiated a statutory consultation to propose an initial 12-month allowance in the default tariff cap for bad debt costs related to Additional Support Credit (ASC) provided to prepayment meter customers.

While the proposal for ASC allowance has received broad support from other energy suppliers, members of Energy UK, Octopus encourages Ofgem to consider the overall cost of bad debt and payment differentials in its price cap operating expenditure review.

It said: “Octopus Energy wishes to make clear that it does not support this proposal as it considers the proposed implementation to be flawed and that it would reduce the incentive on suppliers to manage debt effectively.

“Instead, Octopus Energy encourages Ofgem to consider the cost of bad debt and payment differentials in the round as part of its price cap operating expenditure review.” The energy supplier also explained that “it does not support any supplier levy or reconciliation mechanism to deliver payment levelisation as it is concerned it would introduce moral hazard.”

Energy Live News has contacted Octopus for comment.