Citizens Advice response to the Ofgem statutory consultation on introducing an allowance for bad debt associated with Additional Support Credit in the retail price cap
We support the actions taken to tighten up the rules on when and where prepayment meters (PPMs) can be installed, including as set out in the statutory consultation on Involuntary PPM. We also agree that suppliers’ efficient costs should be recognised within the retail price cap. We accept that bad debt associated with Additional Support Credit (ASC) can be reasonably expected to increase and so introducing an allowance is appropriate.
We do, however, have concerns with the rationale Ofgem has provided for this proposal and the method used for setting the allowance. In particular, we would highlight:
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The requirement for suppliers to provide high levels of care for consumers and comply with rules should not be linked to funding. Compliance should be ensured through comprehensive monitoring and enforcement.
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It should be recognised that the price cap still provides funding to suppliers when there is not a specific allowance. The proposed temporary allowance should be reduced by an estimate for the baseline level of ASC bad debt costs.