London, May 13, 2026, 13:02 BST
The UK government’s proposal to write off up to £500 million in energy debt for vulnerable households hasn’t started yet. That delay leaves ministers under pressure, with industry projections showing consumer arrears heading toward £7 billion—roughly $9.5 billion—by the end of the year. Officials say they’re still working through data-sharing requirements for the scheme. Ofgem, for its part, says the final call belongs to ministers.
It’s a tough moment for households. Cornwall Insight is now projecting Ofgem’s energy price cap for July through September at £1,843.78 for a standard dual-fuel direct debit customer—an increase from £1,641 over April to June. The cap, just as before, only affects unit rates and daily standing charges, not the overall bill.
Ofgem floated a plan to kick off Phase 1 of the Debt Relief Scheme in early 2026, targeting those who slipped into arrears during the energy crisis and could find repayment tough. But the regulator pointed out that rollout would hinge on new legislation—specifically, rules letting suppliers and the Department for Work and Pensions share data on who qualifies for means-tested benefits.
Last year’s government data-sharing consultation framed the proposed changes as a way to bolster passported benefits like free school meals and to extend support to households facing energy debt via the new relief scheme. But for now, the plan remains caught in policy review—not yet something energy suppliers can act on.
Household energy debt has ballooned to roughly £5.5 billion, more than twice what it was three years ago, according to Energy UK. About 75% of that total is arrears. “The industry can’t fix this problem alone,” said Dhara Vyas, chief executive at the trade group, urging both government and Ofgem to step in without delay. Energy UK
Domestic customer debt and arrears more than 91 days overdue hit £4.55 billion in the fourth quarter of 2025, climbing 18% year on year, according to official data from Ofgem. The regulator counts arrears as bills still unpaid without a formal repayment plan. On average, electricity arrears reached £1,773, while gas came in at £1,512.
Pressure is mounting at British Gas. According to a report from The Telegraph last week, the energy supplier flagged that customers left over £1 billion in bills unpaid last year. Centrica, which owns British Gas, updated investors on May 7: it expects 2026 retail EBITDA to land at the lower end of its previous range, citing “continued challenges” with collecting residential bad debt. The Telegraph
It’s not just British Gas feeling the squeeze—the strain cuts across the sector. E.ON is moving to buy Ovo, a move that would see around 4 million Ovo customers joining E.ON’s existing 5.6 million-strong UK base. The deal highlights the growing need for size in a retail energy market now grappling with heavier regulation, steeper capital requirements, and a surge in unpaid bills.
Still, clearing debt isn’t without drawbacks. Ofgem points out that the average household is already shelling out roughly £52 each year to cover the costs tied to managing and wiping out energy debt. Ill-aimed relief, they warn, could push even more of that burden onto customers who are actually keeping up with their payments.
British Gas is committing £40 million over five years to the British Gas Energy Trust, its fund offering grants, emergency fuel vouchers, and related aid. Managing director Gary Booker called energy debt and fuel poverty a “major priority,” but he pointed out that even with these voluntary contributions, the scale remains modest against national arrears running into the billions. Centrica Plc
