Energy UK, a trade association representing the sector, has warned that domestic energy arrears could climb to £7bn by the end of the year. This represents a significant jump from the record £6bn in unpaid household energy bills recorded at the end of June, reflecting an accumulated increase of approximately £500m over the preceding twelve months.
The escalation in energy debt is being driven by rising wholesale gas prices, which the trade group attributes partly to geopolitical tensions in the Middle East. Energy UK anticipates that the government’s price cap on gas and electricity will increase by 4% effective in October, marking the highest level in three years. Under this forecast adjustment, the typical household would face an annualized gas and electricity bill of £1,729, based on calculations from forecasting firm Cornwall Insight. The analysis projects electricity rates rising to 26.57p per kilowatt hour from 26.11p, while gas charges would increase to 7.90p from 7.33p for customers on direct debit payment plans.
Dhara Vyas, chief executive of Energy UK, has called on the government to implement more durable policy solutions rather than temporary measures. She specifically advocated for a social discount tariff to address fuel poverty gaps. The organization noted that while the new prime minister’s plan to reduce VAT on household electricity bills from October would provide approximately £45 in annual savings, this relief would be substantially negated by the price cap increase.
Global wholesale market sourcing costs represent the largest factor contributing to the expected price rise, though upgrades to Great Britain’s energy infrastructure are also playing an increasingly significant role. Energy UK’s debt estimates exceed official Ofgem figures by roughly £1bn, as the regulator only counts bills unpaid for more than 90 days, whereas the industry group includes those overdue beyond 30 days. The unpaid bills currently add approximately £50 annually to typical household bills.
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