A supportive measure, but funded by all consumers
In response to the surge in energy debt, UK regulator Ofgem is planning to write off up to £500 million in unpaid bills for nearly 200,000 households receiving means-tested benefits. This initiative, which could take effect as early as 2026, targets vulnerable families who accumulated more than £100 in energy debt between April 2022 and March 2024.
Suppliers would automatically identify eligible customers. To qualify for debt relief, individuals would be required to show good faith: by making a partial payment, continuing to pay their current energy bills, or agreeing to receive financial counselling from debt charities.
However, this support comes at a collective cost. To finance the scheme, £5 will be added to everyone’s energy bills, on top of the £52 already paid each year by households on the price cap tariff, which currently totals around £1,755 annually.
According to Ofgem’s latest data (April to June 2025), total energy debt in the UK has reached a record £4.4 billion, with more than one million households having no active repayment plan. This alarming situation has prompted urgent action from the regulator.
While cancelling or recovering £500 million may slow the growth of energy debt, it is unlikely to reverse the trend entirely. Ofgem is expected to roll out further measures, as energy poverty continues to worsen despite gradually declining gas and electricity prices.
References:
BBC News, "Energy bills: Debts could be wiped for 200,000 benefit claimants", October 29, 2025
Ofgem, Quarterly Debt Report, October 2025