Help for Households with Energy Debt

Thousands of people across the UK could soon get help to clear their energy debts under new plans from Ofgem, the energy regulator. The new Debt Relief Scheme, expected to start in early 2026, aims to write off up to £500 million of unpaid bills built up during the energy crisis.

The scheme could help around 195,000 people, particularly those on low incomes or benefits who are struggling with the rising cost of energy.

Why is the scheme needed?

Household energy debt in the UK has reached a record high of £4.4 billion. Many people fell behind on payments between April 2022 and March 2024, when prices were at their peak.

Currently, the cost of unpaid bills is shared across everyone’s energy bills, adding around £52 a year under the energy price cap. Ofgem’s new plan aims to tackle this growing problem, support those most in need, and stop more debt from building up in the future.

Who will be eligible?

In the first phase of the scheme, help will go to people who:

  • Are receiving means-tested benefits (such as Universal Credit, Income Support, or Pension Credit).
  • Have built up more than £100 of energy debt between April 2022 and March 2024.
  • Are either:
    • Making some contribution towards their debt or energy use, or
    • Willing to work with a debt advice charity to manage their finances.

Energy suppliers will automatically identify and contact eligible customers, you won’t need to apply.

How the support will work

Under the scheme, energy suppliers will write off qualifying debt for eligible customers. This will reduce the total amount owed and give households a much-needed fresh start.

The cost of this relief will be shared across all customers’ bills, adding around £5 extra per year to each household’s energy bill.

While this is a small increase, Ofgem says the long-term goal is to make the energy system fairer and reduce the overall burden of debt for everyone.

Other proposed changes

Ofgem is also planning wider reforms to stop debt from building up again, including:

  • A new “move in, sign up” system to make sure people register with an energy supplier as soon as they move into a new home. This would replace the current “occupier” system, which often leads to unpaid bills under anonymous accounts.
  • Safeguards for vulnerable people, such as adding temporary credit to smart meters when properties switch to prepayment mode, to ensure households are not left without energy.
  • A new “Know Your Rights” guide for consumers, explaining what energy suppliers must do to support customers struggling with bills or debt.

When will the scheme start?

Ofgem will publish a final consultation on the plans soon, with the Debt Relief Scheme expected to begin in early 2026.

The first phase will focus on helping those on means-tested benefits, but Ofgem has said this could be expanded in future to support more customers if needed.

What should you do if you’re struggling with energy bills now?

If you’re finding it hard to pay for gas or electricity, don’t wait for the new scheme to start. There is help available now:

  • Contact your supplier as soon as possible – they must work with you to agree a manageable repayment plan.
  • Ask about hardship funds or grants – many suppliers offer one-off payments to help clear or reduce debt.
  • Get free debt advice from organisations such as:

These charities can help you make a budget, negotiate with suppliers, and access any financial support you’re entitled to.

In summary, The Ofgem Debt Relief Scheme is a welcome step towards easing the pressure on households who built up energy debt during the crisis. It will:

  • Write off up to £500 million in unpaid bills.
  • Support those on the lowest incomes.
  • Encourage fairer management of energy debt in future.

While the scheme won’t start until 2026, Ofgem’s wider reforms and guidance aim to give vulnerable households more protection and clearer support in the meantime.

Don’t Forget

If you’re on a low income, receiving Universal Credit or other benefits, and struggling with rising energy costs or existing debt, extra help may be available right now.

Through the government-backed ECO4 Scheme and the Great British Insulation Scheme (GBIS), eligible households can access free insulation and heating upgrades, designed to make homes warmer, more efficient, and easier to afford.

Check your eligibility here, it’s quick, free, and could help you create a warmer, healthier, and more affordable home.