Britons find themselves burdened by nearly £4.8 billion in unpaid bills to energy providers as households struggle to cope with soaring energy costs. Recent data released by regulator Ofgem revealed that the outstanding debt has increased by £240 million, reaching a new record high in the first quarter of this year, marking a 5% rise.
The situation is expected to worsen as Ofgem’s price cap is set to rise by 13% to £1,862 per year starting next week for dual fuel households paying through direct debit. This hike equates to an additional £221 annually, or £18 per month, based on the current cap of £1,641.
Ofgem attributed the persistent rise in energy debt to affordability challenges, existing high levels of historical debt, and industry processes. The impact is felt industry-wide, with an average £50 added to annual bills to cover outstanding debts, regardless of whether individual households owe money to their suppliers.
The number of electricity accounts in debt has increased by 3% to 852,000, while gas accounts in debt have risen by 4% to 710,000. The average amounts owed without a repayment plan stand at £1,876 for electricity and £1,623 for gas, significantly higher than previous years.
For customers with repayment plans, the average owed amounts are lower at £828 for electricity and £679 for gas but still represent record highs. Over 1.1 million electricity accounts and more than 900,000 gas accounts are behind on payments without a structured repayment plan in place.
Since 2018, the overall debt has surged from under £1.1 billion to the current £4.79 billion, mainly comprising customers who are at least three months behind on payments. The escalating debt levels have raised concerns among industry experts and advocacy groups, calling for urgent action to alleviate the financial strain on households.
Ofgem is working on proposals to address the root causes of rising energy debts, aiming to publish them later this summer. The regulator emphasized the need for a collaborative effort involving government, suppliers, and community organizations to stabilize debt levels and ensure fair treatment for all consumers.
Amidst escalating energy debt, advocates are urging the government to implement support measures, including the long-delayed Debt Relief Scheme, to assist millions of struggling households. Addressing the issue proactively is crucial to prevent further financial distress and maintain affordability in the energy sector.
The industry is striving to enhance service standards, provide targeted support, and facilitate responsible debt recovery to safeguard consumers’ interests and promote financial stability within the energy market.
