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Fair by Design

Fair By Design responds to Ofgem’s consultation on additional debt related costs 

Ofgem’s consultation on additional debt related costs aims to inform policy decisions about whether they should adjust the energy price cap to better deal with energy debt and arrears (currently standing at £2.6bn).

The default tariff cap (‘the cap’) came into force on 1 January 2019. The cap ensures that default tariff customers pay a fair price for their energy that reflects the efficient underlying cost to supply that energy.

Given growing levels of energy debt Ofgem has been carefully monitoring the evolution of debt-related costs relative to price cap allowances.

Ofgem has seen evidence of a gap between costs and the existing cap allowance in cap period 8-10a (April 2022 – June 2023). Ofgem is therefore issuing a policy consultation on whether they should adjust the price cap to account for these deviations between costs and allowance. Ofgem considers that it is in the interest of customers to allow suppliers to recover efficiently incurred costs, as suppliers going out of business ultimately increases costs for all consumers.

Fair By Design’s response to this consultation is driven by the desire to get rid of premiums that those on low incomes pay due to how they pay for their energy.

You can read our full consultation response here.