With winter just a few weeks away, households across Great Britain are facing a staggering increase in energy arrears. This year we are witnessing more families defaulting on their payments than ever recorded. Engagement from energy suppliers Ofgem, the industry regulator, announced in July that £4.4 billion was owed to energy suppliers at the end of June. This would represent a rise of more than £750 million a year. All of this adds enormous stress to the families who are most affected by this cost escalation.
These shocking numbers underscore a deepening crisis in energy affordability. In June, an unprecedented 7 million British households were unable to afford their energy bill through direct debit. Whether small or major, this evolving payment trend is a sign of the enduring effects of the energy crisis. The fiscal pressure continues to deepen. This is in large part thanks to the upcoming quarterly cap on energy charges, which rises yet again on Wednesday. At the same time, wholesale gas prices have fallen. Even the price cap for a typical annual dual-fuel bill will still increase by 2%, to £1,755.
Energy companies are facing the highest level of customers ever who are in arrears and unable to pay. As of June, an estimated 876,000 electrified households were currently repaying electricity debts, and an additional 714,000 gas-serviced households were doing the same for gas debts. The data reveals a concerning trend: the number of households without a repayment plan has soared to new heights, reaching 1.13 million for electricity and 926,000 for gas.
E.ON chief executive Chris Norbury provided a great deal of context and insight. He pointed to the types of borrowers in the company’s debt portfolio. He highlighted three distinct groups: those who have fallen into financial hardship and view energy debt as a symptom of poverty; people who’ve always been able to pay their bills, but are suddenly falling behind in today’s energy crisis; and a burgeoning class of paying customers that you don’t have the money to get, even if they could pay.
“If you look at our debt book it tells a story: fundamentally, there are three types of customer. There are people who have sadly fallen off the edge financially and energy debt there is ultimately a symptom of poverty.” – Chris Norbury
Norbury emphasized the importance of targeting aid to those who need it most. 250,000 That includes folks who have never experienced hardships, who all of a sudden are in the trenches.
“The second group of people that we see showing up in our debt book are people who have never struggled to pay their energy bill before, but they have started to through the energy crisis. Whenever these people engage with us we will always offer support.” – Chris Norbury
Today, an increasing percentage of those who don’t pay their bills can afford to. This trend is raising mounting alarms about the cumulative costs to all. Increasing arrears from these customers require an immediate response. Energy companies should focus their efforts to assist those most in need.
“Then, sadly, we see a growing cohort of customers who can pay, but for whatever reason won’t pay. Ultimately the customers in this category are costing everyone else more. It’s important that we target support for those who need it most.” – Chris Norbury
Simon Francis, coordinator of the End Fuel Poverty Coalition, said he was “absolutely horrified” by the increasing numbers. As an example, he urged the Treasury to act urgently. He added that the status quo should “ring alarm bells” for lawmakers.
“It is simply unsustainable for consumer energy debt to continue to grow unchecked.” – Simon Francis
It’s stories from people stuck in poverty and vulnerable people like Lindsey, a 62-year-old retired nurse from Cheshire who are being failed time and again. She relies on a stable living environment to keep her uncontrolled asthma and depression under control. Her plight highlights the human cost of increasing energy prices and why help is so important in these winter months.
Gillian Cooper, director at Citizens Advice, warned that while expanding initiatives such as the £150 warm home discount is welcomed, it is insufficient to reverse the tide of mounting energy debts. The organization emphasizes the need for long-term, systemic solutions that address more than just short-term, emergency relief.
“We know allowing households to build up unsustainable debt isn’t the right thing to do, and it’s vital that people pay for the energy they use as increasing levels of debt drive up costs for everyone.” – Ofgem spokesperson
With winter looming, accruing debt is a major worry. Whether it’s paying an energy company or keeping up with rent, so many households are facing a crisis that underscores the need for holistic solutions. The stakes couldn’t be higher. Without prompt action and resources, millions more households will be forced to choose between keeping their homes warm in the winter and affording other basic necessities.