Britain's energy regulator Ofgem plans to write off up to £500 million in household energy debt to help around 195,000 people struggling with bills from the recent energy crisis. The scheme, launching early next year, targets those on means-tested benefits who accumulated more than £100 in debt between April 2022 and March 2024.
Eligible households must make some contribution towards their debt and current usage, or engage with debt advice charities if unable to pay. Energy suppliers including British Gas, OVO, Octopus, E.on and EDF will identify qualifying customers under the proposals.
The cost of the write-off will be spread across all households through an estimated £5 increase to annual energy bills in 2027/28. Consumers already pay £52 per year towards historic unpaid debt under the current price cap system.
Record debt burden
Total household energy debt in England, Scotland and Wales hit a record £4.4 billion by the end of June. Around one million households have no repayment arrangements in place, with average debts reaching £1,716 for those without payment plans.
Charlotte Friel, director for retail pricing and systems at Ofgem, said: «We know the growing amount of debt in the energy system is a significant challenge. We must protect consumers by striking the right balance between making sure those that can pay are supported to do so, and targeting support at those who need it most.»
Energy UK called the scheme an "important first step", while fuel poverty groups welcomed the move but urged more action to protect vulnerable customers. MPs had earlier called for windfall taxes on suppliers to address the debt crisis.
Note: This article was created with Artificial Intelligence (AI).
