Household energy debt in the UK has more than doubled over the past three years, reaching £5.5 billion, industry figures reveal.
The increase means that typical households are paying an extra £50 a year on top of their own energy usage to cover outstanding debts.
Energy UK, which represents the country’s energy suppliers, said around two million households are currently in debt to their provider, with nearly 60% of these customers not enrolled in repayment plans. Arrears now account for 75% of all unpaid energy bills, leaving the majority of debt unmanaged.
The situation is further complicated by more than one million households having no registered details with suppliers, increasing the risk of uncontrolled debt accumulation.
A trial of new tenancy change rules has been proposed to address issues that drive 10% to 15% of total outstanding energy debt, Energy UK noted. However, the trade body warned that these measures fall short of the immediate reforms that would align the UK with other countries.
The cost of rising energy debt is being passed on to all households. Typical dual-fuel customers on the energy price cap face an extra £50 annually, while standard credit customers – who pay after using energy – pay roughly £140 extra due to a “debt allowance” built into tariffs.
Energy UK cautioned that, without urgent intervention, total household energy debt could exceed £7 billion by the end of 2026.
Chief executive Dhara Vyas said: “This is a massive crisis for the UK energy sector, unlike any other utility. All energy customers are affected, as they end up paying more. Suppliers are doing what they can to support households, but with debt and arrears spiralling, the industry cannot resolve this alone.
“Immediate and decisive action from both Ofgem and the Government is essential to stabilise the sector and protect both households and energy companies.”