Soaring household energy debts ‘to hit £7bn by the end of 2026’

Jonathan Leake

Thu, 26 February 2026 at 8:26 pm GMT+9 3 min read

Copy of 2602 Ofgem underestimates household energy debts

Britain’s household energy debts will rise from £5.5bn to hit £7bn by the end of the year, a new report has warned.

The increase suggests that at least two million households will struggle to keep up with their gas and electric bills by December 2026, according to a study commissioned by trade body Energy UK.

Persistently high energy bills are largely to blame for the increase in debts, analysts said, although there had also been an uptick in people choosing not to pay.

The increase is problematic not only for those indebted to energy suppliers, but also for other households who have to pay an average surcharge of £50 a year to cover the missing money.

“The household energy debt crisis is spiralling out of control,” the study says. “In the last three years alone, total energy debt and arrears have more than doubled.

“Official figures [from regulator Ofgem] suggest the total now stands at £4.5bn [but] Energy UK’s analysis shows that the true figure is already around £5.5bn.

“Without urgent intervention, the total amount of debt and arrears owed is likely to hit £7bn by the end of the year. This would require a further £10-£15 per year to be added to energy bills.”

Ofgem revealed on Wednesday that annual energy bills will fall by £117 from April as the price cap – the average amount suppliers are allowed to charge their domestic dual-fuel customers – is set at £1,641.

However, bills are still much higher than before the energy crisis, when the price cap was at £1,277.

Energy UK’s report comes amid growing industry concern over rising energy debts and suppliers’ inability to tackle the problem.

Some analysts argue that the surge in debt is partially because of regulations brought in after the British Gas prepayment meter scandal in 2023.

An investigation revealed that debt collection agents working for British Gas were forcibly entering the homes of vulnerable customers to install “pay-as-you-go” prepayment meters, even when those customers had clear medical or financial needs.

Once installed, such meters automatically disconnect energy supplies unless they are topped up. However, the backlash led to such measures being banned.

Britons ‘cannot afford their bills’

Energy UK’s report, compiled by leading energy consultancy Baringa, said: “The reason for such a dramatic increase in energy debt and arrears is that a series of regulatory actions have made it much easier to get into debt, and harder to get out of debt.

“It is striking that no other utility has seen similar increases in debt and arrears.”

Energy UK also highlighted how there were almost one million households for which energy suppliers have no details, making it “extremely difficult to recover unpaid bills in this scenario”.

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An Ofgem spokesman acknowledged the problem: “The current levels of energy debt are unsustainable, and this is a challenge that requires action from everyone – the regulator, government, and industry alike.”

Alex Belsham-Harris, head of energy policy at Citizens Advice, added: “We estimate that nearly seven million people are living in households in debt to their supplier.

“Every day our advisers help people who are making impossible decisions between keeping their homes warm to a safe or comfortable level or putting food on the table.”

Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “Energy debt has risen for one simple reason: energy bills have remained far higher than household incomes can sustain.

“This is not a story of widespread ‘on’t pay’ behaviour, it is overwhelmingly about people who simply cannot afford their bills.”

Bill Bullen, chief executive at Utilita Energy, which specialises in supplying energy to lower-income households, said that rising debts would inevitably lead to higher bills for everyone else.

A government spokesman said: “We are working urgently with Ofgem to drive debt out of the energy system and are also delivering reforms that put people first.”

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