Energy suppliers must help vulnerable customers in debt
PAGas and electricity firms must do more to help those struggling to pay bills by spotting debt before it becomes severe, the energy watchdog has said.
While the number of customers in debt is down, providers allow customers to accrue £600 in unpaid bills on average before they start paying money back.
Ofgem wants energy suppliers to step in sooner to help customers manage debt.
Under new rules, energy suppliers must make extra efforts to treat vulnerable customers fairly.
"Paying off energy bills is a major concern for many customers in vulnerable situations," said Rachel Fletcher, Ofgem's senior partner for Consumers and Competition.
"When suppliers let big debts accrue, it's a sign that they're not spotting debt or stepping in early enough to help customers who are struggling to pay bills.
"We want the industry to demonstrate that it is identifying and supporting these customers in a timely way. We will be monitoring suppliers to make sure they make long-term improvements on bringing down debt."
Theresa May vowed in early October to place a price cap on energy bills, but the legislation is unlikely to take effect before winter.
To prevent households from overpaying during the winter period, Ofgem has implemented a more limited price cap for about one million vulnerable households this winter to help them save on average over £120 a year.
'Friendly credit'
Ofgem says that it has seen some improvements from suppliers, as more customers with debts of less than £100 are managing to repay them.
Some suppliers are also providing customers on meters with "friendly credit" to keep gas and electricity running when people forget to top up.
However, it said the number of prepay customers repaying much larger bills was not decreasing fast enough, because some gas and electricity suppliers were allowing customers to accrue debts of more than £1,000 before taking action.
The energy watchdog said that in particular, small and medium suppliers were not equipped to prevent debt build-up, some of which is not the fault of the customer, such as inaccurate billing - where payments do not cover use - and problems with billing systems.
"All suppliers must be aware of their obligations, anticipate the challenges they may face from the start, and have adequate systems in place to support financially vulnerable customers," Ofgem wrote.
"This is essential to avoid creating or exacerbating existing vulnerable situations."