Debt owed to energy suppliers in Great Britain has reached a new all-time high of £4.79 billion, marking a 5% increase compared to the previous quarter, according to data published by the energy regulator Ofgem on July 1. The figure underscores the growing financial strain on households as the regulator's price cap is set to rise by 13% from the same date.
Rising Number of Accounts in Repayment Plans
Ofgem reported that the number of electricity accounts with an active repayment arrangement rose by 3% to 852,000, while gas accounts in similar plans increased by 4% to 710,000. Among those with repayment plans, the average debt rose by 4% for both electricity and gas, reaching £828 and £679 respectively. For customers without a repayment plan, average arrears were nearly double: £1,876 for electricity and £1,623 for gas.
The data, which is updated quarterly, covers the period from January to the end of March 2025 and includes energy customers who have been in debt for more than three months. Ofgem noted that total debt and arrears across England, Wales, and Scotland have increased by 15% over the past year.
Price Cap Impact and Future Forecasts
The record debt levels come just as Ofgem's price cap is scheduled to jump by 13% from July 1. Forecasts suggest that the next price cap, effective from October 1, will remain at similar levels to July's figure, offering little respite for struggling households. Ofgem's director general of markets, Neil Kenward, described the situation as a complex, industry-wide issue requiring a coordinated response.
Kenward stated: “Energy debt is continuing to rise, putting pressure on households facing the stress of debt, increasing costs for bill payers, and limiting the industry’s ability to invest and innovate. This is a complex, industry-wide issue, that needs to be addressed with a balanced and coordinated programme of activity across the industry, including from Ofgem, Government, suppliers, and community groups and charities in order to stabilise debt levels.”
Charities and Advocates Sound Alarm
Gillian Cooper, director of energy at Citizens Advice, expressed deep concern over the rising debt levels. She noted that the charity has seen a 70% increase in the number of households it supports with energy debt since 2021. Cooper said: “It is extremely worrying that energy debt has again grown to record levels, but it’s not a surprise. At Citizens Advice, we’ve seen a staggering 70% increase in the number of households we support with energy debt since 2021. Soaring debt is hurting vulnerable households and ultimately driving up the costs of everyone’s bills.”
James Mabey, policy analyst at National Energy Action, highlighted the human cost of the debt crisis. He stated: “It is deeply worrying that Ofgem’s latest figures show energy debt has risen again to a new record high. For the households National Energy Action supports, the consequences of energy debt include cold homes, rising anxiety and impossible choices about essentials. This debt has built up because bills have gone beyond what many low-income households can afford, and its effects are not limited to those already in arrears. Allowing debt to persist builds additional costs into future price caps, while also increasing the risk of more harmful responses such as households having prepayment meters forcibly installed.”
Industry Calls for Comprehensive Debt Strategy
Ned Hammond, deputy director of customer policy at Energy UK, emphasised the need for a coordinated approach to tackle the worsening debt crisis. He said: “The latest figures show that the debt crisis engulfing the energy sector continues to worsen. Many households simply can’t afford their energy costs, and rising bills driven by the conflict in Iran will be a worry for lots of customers. Anyone who needs additional support should contact their supplier in the first instance, as they offer a range of additional measures from flexible payment plans to energy-saving technology. But it must also be acknowledged that current rules make it all too easy for customers to fall into arrears, with limited routes to get out. That’s why Energy UK has been calling for a comprehensive debt strategy to properly tackle this challenge. We welcome Ofgem’s plans to change the home move process to reduce the risk of new occupants building up unpaid bills. This should now be combined with the swift launch of the Debt Relief Scheme, actions to widen adoption of Smart Pay As You Go meters, better targeted bill support from the Government, and stronger collaboration between suppliers and debt advice agencies.”
