Domestic energy debt across Great Britain is projected to climb to approximately £7bn by the end of the year, according to warnings from Energy UK, the industry trade association. This represents a significant escalation from the £6bn in arrears recorded at the end of June, reflecting a £500m increase over the preceding twelve months.
The anticipated rise in energy debt coincides with an expected increase in the government’s energy price cap, which is forecast to climb to its highest level in three years beginning in October. The regulator was expected to confirm a 4% increase to the price cap later in the week, affecting millions of households. Energy UK’s chief executive emphasized that the current policy response through VAT reductions on electricity—aimed at providing approximately £45 in annual savings—would be insufficient to counteract the price cap increase, leaving households facing higher overall costs.
According to forecasters at Cornwall Insight, the typical household under the new price cap could face annual gas and electricity bills equivalent to £1,729 during the final quarter of the year. Electricity rates are projected to rise from 26.11p to 26.57p per kilowatt hour, while gas charges are expected to increase from 7.33p to 7.90p for households using direct debit payment methods. The underlying calculation reflects reduced household energy consumption as residents attempt to manage mounting debt levels.
Energy UK attributed the expected price cap increase primarily to rising costs in sourcing gas from global wholesale markets, with additional pressure stemming from expenses related to upgrading Great Britain’s energy infrastructure. The trade group called for the government to adopt a “targeted and more permanent” approach to energy affordability, including the implementation of a social discount tariff structure, rather than relying on temporary or emergency measures.
The debt figures compiled by Energy UK are notably higher than official estimates released by the regulator Ofgem, which counts overdue bills only after 90 days have elapsed. Energy UK’s methodology captures arrears unpaid for longer than 30 days, resulting in approximately £1bn difference between the two measurements. Ofgem incorporates the higher debt estimates when calculating consumer impact, adding approximately 3% to typical annual bills.
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