Decision on extension to additional support credit bad debt cost allowance
Decision
- Publication date
- Industry sector
- Supply and Retail Market
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Extension of the allowance for Additional Support Credit bad debt costs
Decision on extending the current allowance in the price cap, for bad debt associated with additional support credit, given to prepayment meter customers.
Summary of outcome
In August 2023 we published our decision on introducing an allowance into the price cap for bad debt associated with additional support credit given to prepayment meter customers from 1 October 2023, for 12 months initially. This is due to expire on 30 September 2024.
We have decided to extend the current allowance for ASC bad debt costs from 1 October 2024. This decision follows a policy consultation open from 14 June to 12 July 2024.
Detail of outcome
We received feedback on a number of aspects of our consultation proposals. We have carefully considered all responses received and we are grateful to all respondents for their engagement in the consultation process.
We have decided to maintain our consultation position and extend the current allowance for ASC bad debt in the cap, from cap period 13a (October to December 2024) until the outcome of the review of the operating costs allowance is implemented.
As wider cost of living issues continues to put pressure on households’ ability to pay their energy bills, we consider it is in the consumer interest to extend this allowance, given the benefits of ASC for the most vulnerable consumers. Extending the current allowance will continue to best support suppliers to assist vulnerable consumers through issuing appropriate levels of ASC.
To calculate the allowance, we have decided to maintain our consultation position and continue to use ‘Annex 8 - methodology of adjustment allowance’, as set out in our decision to introduce the ASC Allowance for bad debt costs, in August 2023.