Households across Great Britain face mounting energy debt as domestic arrears are projected to climb to £7bn by the end of the year, according to warnings from the energy industry. The escalating debt burden reflects a combination of higher wholesale gas prices and anticipated increases in regulated energy costs, with debt levels having already reached a record £6bn at the end of June after rising roughly £500m over the preceding twelve months.
The regulator is expected to announce a 4% increase to the energy price cap effective from October, bringing typical household annual bills to approximately £1,729 according to forecasts from Cornwall Insight. Under the revised cap, electricity rates are anticipated to rise from 26.11p to 26.57p per kilowatt hour, while gas charges are projected to increase from 7.33p to 7.90p for households paying by direct debit. Using previous calculation methodologies, the price cap would reportedly reach £1,940.69—the highest level since summer of 2023—though actual household bills will vary based on individual consumption patterns.
Energy UK, the industry trade association, has called on the government to implement lasting solutions to address energy affordability, proposing a social discount tariff as a more permanent measure rather than temporary interventions. The group’s chief executive emphasized that the promised VAT reduction on electricity bills from October, which aims to provide approximately £45 in annual savings, will be insufficient to offset the impact of the price cap increase. The rising cost of sourcing gas from global wholesale markets represents the primary driver of price increases, though expenses associated with upgrading Great Britain’s energy infrastructure are also contributing factors.
Energy UK’s debt estimates exceed official Ofgem figures by approximately £1bn, as the trade association counts unpaid bills overdue by 30 days or more, while the regulator only includes bills unpaid for 90 days. Despite using lower public figures, Ofgem distributes the cost of unpaid arrears across all consumers based on higher estimates, currently adding roughly £50 annually or approximately 3% to typical household bills.
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