7OCT

Ofgem puts energy debt at £5.02bn

2 min read

12:52UTC

Households owed energy suppliers £5.02bn at the end of June, up 13% on a year earlier, Ofgem's debt and arrears figures show.

← Back to £8.1bn over forecast, and the 30-year at 6%Jump to analysis ↓

EconomicDeveloping

Key takeaway

Energy debt rose 13% to £5.02bn while mortgage arrears fell.

Ofgem, the energy regulator, reported that households owed energy suppliers £5.02bn in debt and arrears at the end of June, up 13% on a year earlier⁠¹. About 1.19 million electricity accounts and 0.95 million gas accounts were in arrears with no repayment plan, meaning no agreed schedule to clear the debt. Those accounts owed on average £1,872 and £1,613 respectively.

Trade bodies cited a record £6bn in late August. Ofgem counts supplier-reported gas and electricity debt only, and the two totals come from different counts, so each figure needs its source beside it.

Mortgage arrears fell in the second quarter, UK Finance reported in August. Over the same months, energy debt rose, so the two household debt measures moved in opposite directions.

Deep Analysis

In plain English

Ofgem, the energy regulator, counts how much households owe their gas and electricity suppliers. At the end of June the total was £5.02bn, 13% more than a year before. About two million accounts were behind on bills without an agreed plan to pay back. People in that position owed an average of £1,872 on electricity and £1,613 on gas. Suppliers must consider what a customer can afford before agreeing a repayment plan, under Ofgem rules.

Deep Analysis

Root Causes

Arrears build when a bill rises faster than income. Energy is a fixed, non-deferrable cost, so households short of cash pay it last, and the balance compounds as monthly bills continue.

The measurement gap has a cause too. Ofgem counts supplier-reported gas and electricity debt only, so its £5.02bn leaves out amounts that trade bodies count differently, which is why trade bodies cited a record £6bn in late August and Ofgem's page does not reconcile the two.

The year-on-year rise of 13% follows from price cap levels that stayed above pre-2021 norms and from standing charges that apply whether or not a household uses energy.

What could happen next?

Consequence
A growing arrears stock raises the bad-debt allowance in the price cap, which adds to bills for paying customers.
Risk
Winter bills arrive with £5.02bn of existing debt on the books, so arrears are exposed to any rise in the price cap.

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: In 2022-23 prices rose sharply and suppliers forced the fitting of prepayment meters in homes in debt, until a media investigation in early 2023 led to a halt and a code of practice. Both episodes link arrears growth to supplier enforcement.

Counter-parallel: Ofgem's 2023-24 debt relief scheme wrote off part of the arrears of customers in hardship, funded through the price cap. That shows the stock can be cleared by regulatory decision, and not by repayment alone.

Immediate: 1.19 million electricity accounts at an average £1,872 implies roughly £2.2bn of electricity arrears with no repayment plan, and 0.95 million gas accounts at £1,613 about £1.5bn, on Lowdown's arithmetic. Together that is around £3.8bn of the £5.02bn, so most of the stock has no agreed route to clearance.

Structural: unrecovered debt is paid for by other customers through the price cap's allowance for bad debt. Higher arrears therefore push up bills for households that do pay. Mortgage arrears fell in the second quarter, so the energy measure moves against the secured-debt trend.

Consensus view: Ofgem's account counts show debt concentrated in accounts with no repayment plan, 1.19 million electricity and 0.95 million gas. For those households the supplier's collection practice decides whether a balance becomes repayment or enforcement.

Counter-view: Unpaid bills are a cost recovered from every customer through the price cap, which gives suppliers a reason to seek debt allowances and not to write balances off.

Key tension: Whether £5.02bn is a stock of bad debt that will be written off, or a recoverable balance that households will repay over years through the standing charge and unit rates.

Sources:Ofgem

Mentions:Ofgem →United Kingdom →UK Finance →

First Reported In

Update #4 · £8.1bn over forecast, and the 30-year at 6%

Ofgem· 7 Oct 2026

Read original →

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