Households in Great Britain are bracing for the steepest increase in summer energy bills in four years, as the quarterly Ofgem price cap rises by 13% from Wednesday to the equivalent of £1,862 a year for an average household. The increase comes just days after figures revealed that consumer energy debt has reached an all-time high of almost £4.8bn, with unpaid bills climbing by £240m in the past three months.
Record Debt and Wholesale Price Surge
According to data released by the industry regulator Ofgem, unpaid energy bills have surged by £240m in the past three months, reaching a record high of nearly £4.8bn. The rising debt is driven by a combination of high wholesale energy prices and the delayed impact of the quarterly price cap, which has shielded households from the full brunt of the crisis until now.
Wholesale energy prices have soared due to the war in Iran, which has disrupted oil and gas shipments via the Strait of Hormuz for the past four months. The price cap, which is updated quarterly, will pass on these higher costs from 1 July, and bills are expected to remain elevated until the next cap takes effect in October.
Political Pressure and Proposed Solutions
Andy Burnham, who appears set to become the next prime minister, will face immediate calls to tackle high energy bills upon taking power. Chancellor Rachel Reeves has ruled out offering universal energy support similar to that provided by Liz Truss's government in 2022.
James Mabey, a policy analyst at National Energy Action, a fuel poverty charity, said: "The consequences of energy debt include cold homes, rising anxiety and impossible choices about essentials. The right response is to scale debt relief."
Nigel Pocklington, the chief executive of supplier Good Energy, said: "Rising energy bills are becoming a financial nightmare for millions of households across the UK, with many people unsure how they’re going to keep up with the current payments, let alone rising costs. We need to urgently reform the way the market operates to deliver and incentivise a cleaner, more affordable energy system. The priority now should be turning that into action."
Good Energy's Proposals
Good Energy has set out a proposal that, combined with recent government measures to reduce bills by £150 a year, could cut household costs by £270 annually. This is close to Labour's manifesto pledge to cut £300 a year from home energy bills by 2030. The company calls on the government to move the cost of supporting government policies from energy bills into general taxation, while increasing payments through its warm home discount scheme by £300 to £450 for 6 million vulnerable households. This would cost the Treasury about £10.1bn and save the typical bill payer £76 a year, while vulnerable households would save £376 a year.
Good Energy has also joined calls for the government to break the link between expensive gas power and the overall electricity market price by taking gas plants out of the market and into a strategic reserve. Under the plans, generators would be paid a steady fixed rate to run their gas plants only as a last resort. The plan could save up to £60 a year for households and could be delivered within two years, according to separate analysis by Greenpeace and consultants at Stonehaven.
"It may not be the final answer," Pocklington said, "but it demonstrates that credible steps can be taken now to break the link with gas and reduce bills, while keeping the need for longer-term reform firmly on the political agenda."
Government Response
A government spokesperson said: "We have taken £150 of costs off energy bills for the years ahead and extended the warm home discount to around 6 million households. We are going further and faster to move on to homegrown energy we control, including taking decisive action to break the influence of gas on electricity prices, to better protect households from energy crises."
