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Brits could soon be forced to make yearly payment to stop energy companies going bust

Brits could soon be forced to make yearly payment to stop energy companies going bust

Industry watchdog Ofgem has warned that providers are struggling to stay afloat due to record-high consumer debt.

When you're forking out for astronomical energy bills in the midst of a cost of living crisis, spare a thought for the suppliers.

Yes, by the way, that was indeed sarcasm.

According to industry watchdog Ofgem, energy suppliers are teetering on the edge of disaster - so you might have to put your hand in your pocket to help them out.

Brits could soon be forced to pay an extra charge per year on top of their soaring energy bills to stop providers going bust.

Energy debts climbed to a whopping £2.6 billion over the summer - the highest ever amount - due to rising prices and the current economic climate.

Businesses have also been buckling under the pressure of the mounting consumer debts.

Around 30 providers have already gone out of business, so energy bigwigs are keen to nip the demise of providers in the bud as soon as possible.

Ofgem is 'considering' adding an extra £17 charge a year on household's energy bills - or £1.50 a month - to protect the struggling energy market.

Energy suppliers are crumbling under the pressure of consumer debt.
Getty Stock Image

The aim is to "reduce the risk of energy firms going bust or leaving the market as a result of unrecoverable debt."

The regulator warned that households could end up stumping up even more cash in the long run if they don't take action now.

The standards of services from energy firms would also slip if firms continue to go out of business, Ofgem said.

But any rise in payments would not come into force until April next year so people aren't crippled by the cost of staying warm this winter.

Ofgem's director general for markets, Tim Jarvis, said of the plans: "We know that households across the country are struggling with wider cost of living challenges, including energy, so any decision to add costs to the price cap is not one we take lightly.

Brits could end up coughing up another £17 a year.
Getty Stock Image

"However, the scale of unrecoverable debt and the potential risk of suppliers leaving the market or going bust, which passes on even greater costs to households, means we must look at all the regulatory options available to us."

He said they are determined to find the 'fairest way to maintain a stable energy market'.

A consultation has been launched on the proposals, while Ofgem iron out the details of how the extra charge would work.

Industry figures, consumer groups and the general public will all be able to weigh in on the plans.

Speaking of energy costs, those eligible for winter fuel payments are set to start receiving funds in the coming weeks.

Featured Image Credit: Getty Stock Image

Topics: Cost of Living, UK News, Money