Ofgem launched consultations in December 2024 covering several aspects of the energy sector, including the Energy Price Cap Operating Cost and Debt Allowances Consultation1. The British Gas Energy Trust, an independent charity, set out its reading of the proposals in a thought piece published on 22 January 2025 by its chief executive, Jessica Taplin1.
The operating cost and debt allowances consultation focuses on adjusting the energy price cap to better reflect the actual operating costs of energy suppliers, including provisions for managing energy debt1. The Trust said the consultation matters because it concerns the level of operating costs suppliers can recover through the cap, and that a balance is needed between avoiding extra burden on households already struggling with high energy costs and ensuring suppliers recover efficiently incurred costs1.
The Trust also raised the levies that sit on household bills. It named the Energy Company Obligation (ECO), which funds energy efficiency improvements for vulnerable consumers, alongside levies supporting renewable energy, and said these have steadily increased over time and directly affect the cost of energy1. It argued that any further levies or additional costs should not be added to the unit cost of energy, and that policymakers and Ofgem should explore funding such initiatives through general taxation or other revenue sources instead1.
On supplier-funded support, the Trust gave these figures1:
| Scheme | Detail |
|---|---|
| British Gas customer support packages | £140 million announced since August 2022, to February 2024 |
| British Gas Energy Trust funding received | Nearly £200 million since being established in 2004 |
| EDF Energy support allocation | An additional £40 million during the energy crisis |
| UK Power Networks Power Partners | About £300,000 a year in grants of up to £20,000 to charities |
The Trust said EDF's allocation covers reducing standing charges for vulnerable customers, enhancing the Customer Support Fund for debt relief and energy-efficient appliances, and funding home insulation projects1. It said Energy UK's Vulnerability Commitment has 13 supplier signatories covering over 95% of the domestic retail market, with independent annual assessments1. It warned that policy decisions affecting supplier profitability could reduce the scope of voluntary schemes, naming charities including Citizens Advice Doncaster Borough, Zinthiya Trust, Bromley by Bow Centre, Riverside Advice, Money A&E, Money Matters and Navigate1.
"In December 2024, Ofgem launched consultations addressing several critical aspects of the energy sector"
Why it matters for households
The price cap sets the maximum a supplier can charge on a default tariff, so what counts as a recoverable operating cost, and how energy debt is treated within the cap, feeds into the unit rates and standing charges households pay. The Trust's central point is that the cap limits supplier revenue, which it says can reduce the funds available for infrastructure, innovation and customer support, and can raise financial risk1. It also flags that levies on bills, including ECO and renewable support, have risen over time and add to what households pay1. For a household's energy independence, the practical questions are how much of the bill is set by wholesale costs, how much by network and policy costs, and how much by supplier cost recovery, because only some of these respond to reducing consumption. The Trust states that its own grants and debt relief work alongside the proposed Ofgem initiatives, and that it funds money, debt and energy advice through not-for-profit charities and social enterprises1.
What happens next
The Trust said the success of the consultations will depend on effective implementation and collaboration across government, industry and civil society, and that it welcomes the consultations while emphasising they must be implemented with a deep understanding of their impact on lower-income households1. It also referred to recent developments from the Department for Energy Security and Net Zero alongside Ofgem's, without setting out a timetable1. No decision dates or implementation dates for the consultations are given in the source1.
Sources1 cited
- Fuel Poverty and Energy: Navigating the Path Forward - British Gas Energy Trust, britishgasenergytrust.org.uk