A cross-party group of MPs has called on the Government to impose a windfall tax on energy networks’ “excess” profits to help clear household energy debts. The Energy Security and Net Zero (ESNZ) Committee said companies had made around £4bn in excess profits, which should be used to fund an “energy debt relief scheme”.
The intervention comes as Chancellor Rachel Reeves considers measures to ease the cost of living in next month’s Budget. The committee, which is dominated by Labour MPs, noted that customer energy debts and arrears now exceed £4bn, a record figure that has more than tripled in five years.
Analysis by Citizen’s Advice found that energy networks, which manage power lines and pipes rather than supply households, had enjoyed windfall profits of about £4.15bn. The windfall arose because Ofgem overestimated borrowing costs as interest rates rose, allowing companies to recover these costs from household bills even though many had secured fixed rates on some borrowing.
Bill Esterson, the Labour chair of the committee, said: “British energy consumers are £4bn in debt, while network companies have made over £4bn in excess profits. These profits have come simply from outperforming price controls, even as millions of families ration energy or go without heat.”
An Ofgem spokesperson said the windfall was the result of “very high levels of inflation in the early 2020s, unseen for 30 years,” adding that the regulator had since implemented changes to bear down on costs across the energy system. The Treasury said the Chancellor would strike “the right balance” in the Budget, while the Department for Energy Security and Net Zero highlighted ongoing support such as the expanded Warm Home Discount.
