UK energy watchdog plans to tackle £4.4 billion consumer debts

Britain’s energy regulator Ofgem announced plans on Thursday to tackle £4.4 billion (S$7.5 billion) of debts built up by customers, which are driving up bills for millions of households.

Unrecovered energy debt is spread across all consumer bills, adding £52, or around 3 per cent, to the current price cap of £1,755 a year for average use.

Ofgem said it will shortly publish a debt relief scheme which seeks to write off £500 million of debt, helping around 195,000 customers, but did not detail how this would be funded.

“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,” Charlotte Friel, director for retail pricing and systems at Ofgem, said in a statement.

Bills still 50% higher than before Ukraine war

The regulator also proposed changing processes when people move into a new home, so that debts are not built up in anonymous accounts before the new occupants register with an energy supplier.

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While domestic energy prices have fallen since their peak in 2023, they remain around 50 per cent higher than in the summer of 2021, before Russia’s invasion of Ukraine sent gas prices soaring and sparked an energy crisis in Europe.

The government, which has made cutting energy costs one of its aims, is under pressure to reduce electricity and gas bills after a domestic price cap was increased in October.

Consumer groups have said energy costs remain unmanageable for many and urged the government to offer more support for those struggling. REUTERS