Overview
- Phase one is due to start in early 2026 and would cancel up to £500 million of arrears for people on means‑tested benefits who built up more than £100 of debt between April 2022 and March 2024, benefiting about 195,000 households.
- The cost would be spread across all customers at roughly £5 a year by 2027–28, with Ofgem saying this should reduce other debt‑related charges such as collections compared with today’s £52 annual debt allowance.
- Eligible customers will be identified by suppliers and must make some payment toward arrears or current use, or engage with accredited debt advice to qualify for write‑off.
- Total household energy arrears stand at a record £4.4 billion, and the Energy Security and Net Zero Committee says Ofgem’s approach is insufficient as it presses for about £4.15 billion of network windfall profits to fund wider debt relief; Ofgem warns retrospective changes could raise costs elsewhere.
- To prevent future debts, Ofgem will consult on move‑in account registration and smart‑meter prepayment with limited credit, addressing an estimated £1.1–£1.7 billion in ‘occupier’ debt, and it is separately urging former customers to reclaim £240 million left in credit on 1.9 million closed accounts.