ofgem | WellnessMaster

Energy bills are set to climb again this autumn – but what happens if you actually can’t pay?

The energy regulator Ofgem will announce another substantial increase in the energy price cap on Friday, with industry experts expecting the annual average cost to jump from the current £1,971 to £3,553.

Fuel poverty and blackouts are becoming a pressing worry for millions across the country, so the grassroots movement, Don’t Pay UK, is calling for people to boycott energy payments from October 1.

What would happen?

If you don’t pay your bill for 28 days, your supplier may get in touch to explain how they could disconnect your gas or electricity.

If they decide to cut you off, suppliers must offer you a chance to pay your debt through a payment plan.

What if you can’t pay off your debt?

Suppliers can apply for a warrant to enter your home and disconnect your supply if you do not reach a settlement about paying off your debt.

They should send you a notice of this, to let you know that they’re applying to court.

Citizens Advice recommends you try to come to an agreement with your supplier prior to the hearing.

It also suggests attending the court hearing even if you haven’t spoken to your supplier, as it’s still possible to come to an arrangement.

If the court grants the warrant, suppliers have to provide a week’s notice in writing before coming to your property and disconnecting the supply.

If your meter is outside your home, your supplier won’t need a warrant to cut you off.

Similarly, if you have a smart meter, suppliers could cut you off remotely – although they must contact you about repaying your debt first, and visit your home to check in with your personal circumstances.

However, Citizens Advice claims suppliers are more likely to fit a prepayment meter in your home than apply for a warrant.

Who can’t be disconnected?

If you are of State Pension age, your supplier cannot cut you off between October 1 and March 31 if you live alone, or you only live with other people of State Pension age (or children under 18).

Your supplier also has to offer support if someone you live with has reached State Pension age, is disabled, or has a long-term physical or mental health condition.

This, again, applies between October 1 and March 31.

Your supplier could set you up with a payment plan during this time.

What is the ‘vulnerability commitment’?

Most UK suppliers are also part of the Energy UK Vulnerability Commitment, which means they will not disconnect you during this six-month period if you live with a child under 16.

Any supplier who is part of this promise also won’t disconnect a household at any time of the year if you are disabled, have long-term health issues, severe financial problems or children under the age of six living with you.

But, for those who have not signed the agreement, they are not obliged to take your personal circumstances into consideration.

Citizens Advice explains that you can make a complaint against your supplier if you think they’ve disconnected you when they should not have done so.

How do you get access to energy supplies again?

You would need to contact your supplier, pay your debt, the reconnection fee and administrative costs.

Some suppliers may request a security deposit too, although only if you do not have a prepayment meter installed.

Once these payments have gone through, you should be reconnected within 24 hours (or within 24 hours of the next working day if they money goes through out of hours).

If this does not happen, you may be entitled to £30 compensation within 10 working days, either as credit to your account, cheque or bank transfer. Further delays will mean more £30 payments.

So, how would Don’t Pay UK work?

As rising energy bills are one of the primary reasons the UK is stuck in a cost of living crisis (while gas and oil giants are reaping huge profits), Don’t Pay UK is calling for immediate action.

It wants at least one million people to pledge not to pay their energy bills if the government does increase the energy price cap on October 1.

However, the campaign is discouraging anyone not on prepayment meters who could face self-disconnect if their credit runs out from getting involved.

This includes households where the energy bills are part of the rent, and for those who risk eviction if bills go unpaid.

If you are struggling to afford your energy bills, you should follow the advice set up by Citizen’s Advice.

Energy regulator Ofgem has confirmed a major policy change today which could impact your bills, yet again.

Now the price cap will be updated quarterly (every three months) instead of every six months, in a bid to prevent large-scale disruption.

The cap was set out in law in 2018, and reflects the maximum suppliers can charge consumers per unit of energy.

It means suppliers can only take 1.9% as profit, but it’s not a cap on the maximum bill a household can be charged, as this is based on their usage.

While it may seem like an insignificant change in policy, it will have a substantial impact on your bills. Here’s what you need to know.

How important is the price cap?

Ofgem made headlines when it raised the price cap in April, meaning every household had to pay more for their annual energy bills.

The average household had to then start paying £700 more for their yearly annual bills, raising them to a record £1,971 (it was previously £1,227).

For many, this is seen as the start of the cost of living crisis.

While the cap stops prices rising and falling dramatically for consumers as wholesale prices go up, it does mean the cost of living is likely to only get harder in the short-term.

However, when wholesale prices fall, the reductions will be passed on the customers as Ofgem should lower the price cap. This will happen more quickly with the quarterly price cap.

The cap was set to rise again come October (to a staggering £3,358 a year according to analysts Cornwall Insight) but this policy change from Ofgem means the next price cap level will be published at the end of August.

Why has this changed?

Ofgem say this change prevents the cost of both gas and electricity lagging behind changes in the market, but admits the market is currently “volatile” so the price cap methodology is to be kept under review.

Ofgem CEO Jonathan Brearley acknowledged that “this situation is deeply worrying for many people”.

He then blamed Moscow’s decision to squeeze its gas supply to mainland Europe, which has a knock-on effect for the UK.

“As a result of Russia’s actions, the volatility in the energy markets we experienced last winter has lasted much longer, with much higher prices than ever before,” he said.

“And that means the cost of supplying electricity and gas to homes has increased considerably.

“The trade-offs we need to make on behalf of consumers are extremely difficult and there are simply no easy answers right now.”

He said this change means consumers will pay the “real cost of the energy”, but added: “We will keep working closely with the government, consumer groups and with energy companies on what further support can be provided to help with these higher prices.”

Why has the change been heavily criticised?

Back in May, MoneySavingExpert Martin Lewis laid into Ofgem’s early proposals to review the price cap every three months, rather than every six.

Explaining how he had lashed out at the regulator over the suggestions in a Twitter thread, he said the changes were “a fucking disgrace that sells consumers down the river”.

He apologised for his outburst, explaining: “I should’ve behaved better. My ire’s institutional not individual, it was inappropriate.”

However, Lewis claimed the changes would bring “dire consequences for consumers”.

Cornwall Insight also predicts that the energy price cap will go up to £3,615 in January. For comparison, it was £1,400 a year in October 2021.

MPs already called on the government at the end of July to take urgent action to help households amid warnings that prices will soar this autumn.

“Once again, the energy crisis is racing ahead of the government,” said Darren Jones, the chair of the business, energy and industrial strategy committee.

“To prevent millions from dropping into unmanageable debt it’s imperative that the support package is updated and implemented before October, when the squeeze will become a full-on throttling of household finances and further tip the economy towards recession.”

With this new policy change confirmed and the new price cap looming at the end of August, this threat of “unmanageable debt” is likely to only creep closer.

WellnessMaster

Get The Latest News on Holistic Wellness

Tag Archives: ofgem

Can Energy Companies Switch Off Your Supply If You Can’t Or Don’t Pay?