Domestic energy debt in Great Britain has climbed to record levels, with households collectively owing suppliers approximately £6bn as of late June. Industry group Energy UK projects this figure could rise to £7bn by the close of the year as energy prices are set to increase significantly.
The regulator is expected to announce a 4% increase to the energy price cap effective October, marking the highest adjustment in three years. Under the new cap, a typical household paying via direct debit is forecast to face annual gas and electricity costs of £1,729, based on reduced consumption patterns. 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 per unit. Using previous calculation methods that account for higher usage levels, the price cap would reach £1,940.69, the highest point since summer 2023.
Energy UK’s chief executive stated that global wholesale gas market costs represent the primary driver of the expected price increase, with expenses related to network infrastructure upgrades also contributing to rising energy costs. The organization urged the government to implement permanent solutions addressing energy affordability, including a social discount tariff, rather than relying on temporary relief measures.
The government’s planned reduction of VAT on household electricity bills from October is anticipated to provide approximately £45 in annual savings per household, though this benefit will be substantially offset by the price cap increase. Energy UK’s debt estimates run approximately £1bn higher than official figures tracked by Ofgem, which only counts bills unpaid for 90 days or longer. The difference between these measurement approaches currently adds roughly £50 annually to typical household bills.
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