British national energy regulator Ofgem has released new data which shows that UK households have accumulated record levels of debt with electricity and gas suppliers in the nation, equal to nearly ($3.8 billion).
Since mid-October, the total debts UK households and businesses owed to energy suppliers increased by £400 million according to the report the regulator released on Friday. Due to the sustained highs in wholesale energy prices, and the wider cost of living crisis, that number has now reached its highest level ever, as households have found themselves unable to settle their energy bills, according to the regulator.
In an effort to protect the energy market and consumers from the increasing threat posed by “bad debt,” Ofgem enacted a one-off price cap adjustment of £16 (equivalent to around £1.33 a month) in effect between April 2024 and March 2025. The regulator called the move necessary to enhance the resilience of suppliers, and their ability to help customers in need of assistance.
Tim Jarvis, the director general for markets at Ofgem said, “We know that cost of living pressure is hitting people hard and this is evident in the increase in energy debt reaching record levels.”
Jarvis added, “The record level of debt in the system means we must take action to make sure suppliers can recover their reasonable costs, so the market remains resilient, and suppliers are offering consumers support in managing their debts.”
The regulator’s plans were criticized by some campaigners however, who claimed that as consumers continue struggle with their bills, energy companies are continuing to rake in record profits.
In an interview with the Guardian, Simon Francis, coordinator of the End Fuel Poverty Coalition, said, “This outrageous tax on energy consumers is simply not fair. Energy suppliers have posted billions in profits already this year while millions of people struggle in cold damp homes. The record levels of energy debt are due to Britain’s broken energy system, not the fault of the hard-pressed public.”
