Higher Energy Bills Due To Debt "Underlines Need For Social Tariff", MP Says

Chair of the energy security and net zero committee Angus MacNeil has said that soaring bills as energy companies try to recuperate consumer debt proves there is desperate need fo the introduction of a "social tariff" to support people struggling to keep up with fuel costs.

Last year energy companies charged £842m a year on energy bills pursuing "debt related costs" – such as bad debt write-offs and administrative costs linked to the debt – but from 1 April, firms will now charge a further £735m per year, according to the campaign group Warm This Winter.

In their report, the campaign found households are now paying energy companies a combined £1.3bn in annual charges as a result of the growing amount of energy debt among energy customers. The way a household pays its energy bills significantly impacts how much of their energy bill goes to service the debt, with prepayment meter customers paying £25.17 per household per year on average but standard credit customers paying £129.71 per household per year, according to Warm This Winter.

MacNeil told PoliticsHome there was a "clear problem with profits being protected" for energy companies at the same time as them making record profits, with British Gas in February reporting its profits climbed from £72m to £751m in a year.

"This doubly underlines and puts it in bold that there's a need for a social tariff," MacNeill said. "Because it makes energy more affordable for people who need energy, and puts them into less energy debt, and leads to less household stress."

A social tariff, which currently exists for other utilities like water, would fix energy bills at a certain level for those on low incomes in order to protect them from volatile energy market pricing. The cost would be