Customers may be forced into paying more for their gas and electricity to help prevent energy suppliers from going bust.

Energy watchdog Ofgem is contemplating a one-off increase to the energy price cap, which controls the amount households pay for their gas and electricity.

It is considering a £17 annual rise – or more than £1.50 a month – ‘to reduce the risk of energy firms going bust or leaving the market as a result of unrecoverable debt’.

A combination of soaring wholesale prices and the cost of living crisis, explains Ofgem, has meant increasing numbers of customers have fallen into the red when it comes to paying for their gas and electricity.

Energy debt now stands at a record £2.6 billion says the watchdog, which says it cannot subsidise energy or force businesses to sell it at a loss.

Ofgem fears without action to support energy companies, consumers may ultimately face higher charges and poor standards of service if the problems lead to suppliers collapsing.

Energy companies, the public and consumer groups are all being consulted.

But some organisations are already opposed to the plan.

The End Fuel Poverty Coalition says energy firms made more than £2bn in profits in the first half of 2023, and while it acknowledges the debt has now reached £2.6 billion, it doesn’t believe it should be passed onto all households.

Simon Francis co-ordinator of the End Fuel Poverty Coalition explained: “Households are struggling under the huge weight of energy debt which has been caused through no fault of their own, but by rising prices.

“All this time, energy firms have continued to profit from the misery of people racking up debt and living in cold damp homes.

“Rather than pass on more increases to energy bills, the Government needs to work with energy firms to introduce a ‘help to repay’ scheme to help get Britain’s households back on to an even keel.”

Fiona Waters, spokesperson for the Warm This Winter campaign added: “The fact Ofgem is considering a £17 additional bill on all households is appalling. They say it’s to cover £2.6 billion of energy debt, but that enormous debt just proves ordinary people cannot keep footing the bill for our broken energy system.

“The government needs to put the public’s need for an affordable energy supply ahead of the demands of energy giants.”

If plans were approved it is understood no increase would happen until April to ensure customers were protected through this winter.

Tim Jarvis, director general for markets at Ofgem, said: “We know that households across the country are struggling with wider cost-of-living challenges, including energy, so any decision to add costs to the price cap is not one we take lightly.

“However, the scale of unrecoverable debt and the potential risk of suppliers leaving the market or going bust, which passes on even greater costs to households, means we must look at all the regulatory options available to us.”