Ofgem has unveiled a series of planned improvements to the energy market aimed at giving consumers more flexibility and better support, especially for those struggling with debt.

Announced on Thursday, December 12, these changes include the potential for energy suppliers to offer low or no standing charges, alongside enhanced protections for households facing financial difficulties.

One of the key proposals includes consulting on the introduction of zero standing charge tariffs under the price cap. This would allow consumers to choose tariffs that best suit their needs, with some already offering low- or no-standing charge options. However, Ofgem believes this should be expanded, making such tariffs more widely available, particularly for those in debt.

Feedback from tens of thousands of consumers who responded to Ofgem's call for input highlighted the desire for lower or eliminated standing charges, which many argued would help ease their ability to manage bills and repay debt. However, Ofgem acknowledged that shifting these fixed costs to energy unit rates could lead to higher bills for vulnerable consumers, particularly those with medical or health needs requiring high energy use. Therefore, the regulator stressed that providing choice would allow consumers to make decisions best suited to their circumstances.

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Ofgem also released a new debt strategy aimed at addressing the growing issue of energy-related debt. With rising energy prices, many consumers are struggling to keep up with their bills, and the regulator has proposed new standards for energy suppliers to better support those in financial difficulty. These include a more consistent approach to assessing customers' ability to pay, in collaboration with debt support charities, as well as clearer communication about the debt relief options available to consumers.

The strategy is designed to prevent unsustainable levels of debt from accumulating and ensure that consumers can access the help they need before their debts spiral further out of control.

Alongside these measures, Ofgem is proposing a targeted solution for the large debts accrued during the recent energy crisis, when bills soared to unprecedented levels. This debt, which has become unsustainable for many households, will require a bespoke intervention to reduce long-term costs for all consumers. Any proposed scheme will be cost-neutral, meaning it will ultimately lower overall energy bills by reducing the cost of debt.

Currently, all consumers contribute to the cost of debt through their energy bills, even though individual debts are not forgiven. Ofgem's intervention aims to address the disproportionate burden placed on consumers by the energy crisis and ensure that the extreme levels of debt built up during this period are managed more effectively.

The proposed reforms are part of Ofgem's broader effort to create a more equitable and sustainable energy market. By introducing more flexible tariff options and improving support for those in debt, Ofgem hopes to make it easier for consumers to manage their energy costs while ensuring that vulnerable households are better protected from rising bills and mounting debt.