Move FM Global News

LONDON, U.K.: Britain’s energy regulator Ofgem said it will roll out new measures to tackle £4.4 billion (US$6 billion) in unpaid consumer energy debts, which are adding costs to every household’s bill.

The regulator said the mounting arrears are contributing roughly £52, about three percent, to the average annual energy bill, which currently stands at £1,755 under the national price cap.

As part of its plan, Ofgem will soon publish details of a £500 million debt relief scheme aimed at helping around 195,000 of the most vulnerable customers. The scheme, to be funded by a temporary levy on other bill payers, would add about £5 to annual bills for one year starting in 2027-2028, the watchdog said.

“We must protect consumers by striking the right balance between making sure those who can pay are supported to do so, and targeting support at those who need it most,” said Charlotte Friel, Ofgem’s director for retail pricing and systems.

Ofgem also proposed changes to prevent debts from building up when people move into new homes. This is a recurring problem when properties remain unregistered with an energy supplier, leaving unpaid balances behind.

Even though energy prices have fallen from the record highs seen in 2023, they remain around 50 percent above pre-Ukraine war levels, when Russia’s invasion sent global gas markets into turmoil and triggered a European energy crisis.

The government, under pressure to ease the cost burden on households, has made cutting energy bills a key policy priority ahead of next year’s general election. The price cap was raised again in October, prompting fresh criticism from consumer groups.

Advocacy organizations have warned that millions of families are still struggling to manage energy costs, particularly low-income and elderly households. They have urged ministers to expand direct support and push suppliers to do more to assist customers in arrears.

Ofgem said it will continue reviewing energy firms’ debt recovery practices to ensure they are “treating customers fairly” and not forcing vulnerable consumers into unsustainable repayment plans.