Hundreds of thousands to have energy bill debt wiped as part of new scheme

HUNDREDS of thousands of people will have their energy bill debt wiped thanks to a new relief scheme launched by the industry watchdog. 

Ofgem will wipe around £500million of energy debt built up by struggling households under its Debt Relief Scheme, which will be launched from early 2026.

The programme will help some 195,000 households, and will initially support those who built more than £100 of debt during the energy crisis between April 2022 and March 2024. 

People receiving means-tested benefits – including Universal Credit, Pension Credit, and Housing Benefit – will be prioritised. 

However, Ofgem said eligible households will be expected to make “some contribution” to the debt.

If they are unable to do so, they will have to work with debt advice charities to help pay small amounts towards the debt.

Ofgem confirmed that a final consultation on the first phase of its debt relief scheme will be published shortly.

Figures published by Ofgem last month showed that households in England, Scotland and Wales owed suppliers £4.4 billion at the end of June.

The ever-increasing debt pile has also meant all households pay more, whether they are indebted or not. 

That’s because £52 is added to annual household energy bills under the current price cap to cover the energy debt pile.

The average debt for people who do not have a repayment plan with their provider currently stands at about £1,716 per household.

The announcement came a day after MPs called on the regulator to pay off some of the energy debt bill using windfall profits on suppliers.

Energy companies pocketed over £4 billion in extra profits between 2022 and early 2025, according to Citizens’ Advice.

Households racked up a record £3.8 billion in debt to suppliers over the same period, the advice service said.

Energy prices spiked in 2022 after Russia’s invasion of Ukraine disrupted global supply chains.

This, combined with increased energy demand as economies bounced back from the pandemic, was a double whammy for consumers.

Polling by debt charity StepChange recently found that over 12 million people across the UK were worried about affording energy bills over the next six months.

Adam Butler, the charity’s public policy manager, said the intervention was “long overdue” and called on the regulator to go further.

“Alongside the scheme, we need targeted, long-term measures that properly protect people in vulnerable circumstances from high energy costs and poor debt collection practices,” he said.

Ofgem said it is pushing forward with proposals to bring the debt down and reform how debts are managed.

These changes will prevent debt growing so high in future and therefore reducing the cost to all households, the regulator said.

Other Ofgem proposals include plans to trial changes to the process households must follow when they move into a new property.

Charlotte Friel, director for retail pricing and systems at Ofgem, said: “We know the growing amount of debt in the energy system is a significant challenge.

“We must protect consumers by striking the right balance between making sure those that can pay are supported to do so, and targeting support at those who need it most.

“These proposals will both directly reach households and relieve the burden of unmanageable debt, while also making changes to the way that debt is managed in the sector.”

How can I get help with my energy debts?

Millions of households are worried about paying off energy debts – but help is at hand.

Some energy suppliers are willing to write off outstanding bills for people who have fallen into arrears.

Citizens Advice says the first step is contacting your supplier.

You should try to negotiate a deal that works for you, according to the service.

They should offer you a repayment plan based on your income, outgoings, debts and personal circumstances.

If you think the repayment plan is unaffordable, you can request a pause.

And if they refuse to pause, and you think the decision is unfair, you can complain to your provider.

If the supplier still doesn’t offer a solution that you’re happy with, you can complain to the Energy Ombudsman.

The regulator will look into both sides of the case and make a decision.

If they think your complaint was dealt with unfairly, the Ombudsman can make your supplier change its decision.

What support can I get?

The Warm Home Discount is a benefit given by the Department of Work and Pensions (DWP) worth £150.

You don’t get the money paid into your account; instead, your supplier deducts the amount from your bill.

To get the support, you to be on low-income or receiving certain benefits, such as Universal Credit.

If you are of state pension age (66) you are entitled to a £300 cash boost to put towards your energy bill as part of the Winter Fuel Payment.

The cash is set to land in accounts from November, but many will also receive the money in December.

Anyone who was born before September 22, 1959 and lives in England or Wales can receive the payment.

Cold Weather Payments were set up by the DWP to help with energy costs.

Temperatures must hit zero degrees Celsius or below over 7 consecutive days for the sum to be paid out.

To be eligible for the support you must be claiming certain benefits like Universal Credit, Pension Credit and Support for Mortgage Interest.

You do not need to apply for the scheme as the money will be paid to anyone who qualifies within 14 days.

If you meet the requirements, you will receive £25 for each seven day period of cold weather.

British Gas Energy Trust offers £2,000 debt relief

You could also get up to £2,000 in debt relief from the British Gas Energy Trust.

The fund is for existing British Gas customers with energy debt or at risk of fuel poverty.

But you will need to have an energy debt between £50-£2,000 on a pre-payment meter or £250 to £2,000 on a credit account, to have a chance of getting the support.