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LONDON, Dec 13 (Reuters) – British energy suppliers could be exposed to nearly 1.9 billion pounds ($2.36 billion) in debt, some of which cannot be recovered, as more and more UK households are unable to pay their bills, a consultancy report said on Tuesday. was
Cornwall Insight said that without action from policies or regulation, the risk of further supplier failures increases, potentially increasing costs to consumers and further exacerbating the cost-of-living crisis.
Fewer than 30 UK energy suppliers operate in Britain, down from a peak of around 70 in 2018.
The number of consumers with no arrangements to repay their debt, and the average size of that debt, has risen over the past decade, with household consumer debt over £1.4 billion in the second quarter of this year, the report said. There is no arrangement to pay the supplier.
In the past six months, the End Fuel Poverty Coalition estimates that nearly 1.6 million consumers have entered fuel poverty.
If only half of those people experience challenges with rising energy prices, the debt rises to around £1.9 billion.
“The knock-on effect of unpaid bills has the potential to be detrimental to suppliers, many of whom were already operating with very tight profit margins. The sad truth is that, as bad-debts increase, so do the chances of supplier failure. is.” said Matthew Chadwick, principal research analyst at Cornwall Insight.
After March next year, the government’s energy price guarantee to limit the amount suppliers can charge per unit of energy will expire. This currently reduces the typical household energy bill in Britain for dual fuel gas and electricity to around £2,500 a year.
“This will increase the risk of supplier failure from April 2023,” Cornwall Insight said.
If suppliers fail, the costs associated with moving customers to other suppliers and special administration for the exiting supplier will be passed on to customers under current rules, which will only exacerbate existing problems related to energy payments.
($1 = 0.8051 pounds)
Reported by Nina Chestney; Editing by Nick McPhee
Our Standards: The Thomson Reuters Trust Principles.
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