Energy UK calls for stronger bill support as household energy debt reaches £5.5bn

Energy UK says household energy debt and arrears stand at about £5.5 billion on its broader measure, with roughly two million households owing money and nearly three fifths of customers with unpaid bills lacking a repayment plan. The trade body warns that the total could exceed £7 billion by the end of 2026 without stronger intervention. BBC News reported this weekend that Energy UK wants a more flexible support scheme aimed at households whose income, health or unavoidable energy use leaves them unable to absorb high bills.

At a glance

• Its broader measure puts household energy debt and arrears at about £5.5bn, more than double the level of three years earlier.
• Around two million households face some form of energy indebtedness and nearly three fifths of customers with unpaid bills are not on a repayment plan.
• Debt-related costs add roughly £50 a year to a typical dual-fuel bill and about £140 for standard credit customers.
• Without stronger intervention, total household debt and arrears could reach about £7bn by the end of 2026.
• Separate June polling found a median £750 owed among respondents in energy debt, with 18% feeling fairly treated and 8% referred to debt advice.
• Energy UK is now calling for a more targeted and flexible support model that can combine income, health and energy-use data.

Debt is now feeding back into everybody’s bill

Energy debt is not confined to the households who owe it. Suppliers must fund collection activity, make provisions for balances that may never be recovered and recover allowed debt-related costs through regulated tariffs. Energy UK's February report estimates that this already adds around £50 a year for a typical dual-fuel household and about £140 for standard credit customers. That creates a vicious circle: high bills increase arrears, and higher arrears add further costs to bills.

The missing repayment plans are the central warning

The most troubling figure is not simply the £5.5 billion total but the number of households without an agreed route out. Energy UK says around two million households face energy indebtedness and nearly three fifths of customers with unpaid bills are not on a repayment plan. Once contact breaks down, arrears can deepen quickly. A separate End Fuel Poverty Coalition survey in June found a median debt of £750 among respondents in arrears, but also weak confidence in supplier support: only 18% felt fairly treated and 8% said they had been referred to debt advice.

Energy UK wants support to reflect actual need

The current Warm Home Discount is simple but blunt. BBC News reported that Energy UK wants income, health and energy-consumption data to be combined so support can vary according to need. That could mean higher help for a low-income household using medical equipment or living in a hard-to-heat property, rather than giving every eligible household the same payment. The trade body says a redesigned scheme could cost around £1.9 billion and provide as much as £450 to some households.

Who pays is as important as who qualifies

Any larger scheme has to be funded. Putting the cost on bills risks raising charges for households just above the eligibility line; moving it to general taxation spreads the burden more widely. Energy UK has increasingly argued that government funding should play a larger role because bill-funded levies are already substantial. The political challenge is to design help that is generous enough to prevent new debt without recreating the expensive universal interventions used during the 2022 energy crisis.

What happens next

The government will have to decide whether to expand existing discounts, create a new social tariff or accelerate data-sharing so support can be targeted before another winter of high bills. Ofgem's debt-relief work and supplier obligations will also matter. The immediate test is whether households in arrears are contacted early enough to agree affordable plans, because preventing balances from compounding is cheaper than trying to write them off later.