Ofgem has reported that domestic energy debt and arrears reached £3.82 billion in September 2024, a 91 per cent (£1.82 billion) increase in two years1. The regulator set out the figure in a consultation on debt standards in the domestic retail market, published on 12 December 2024, which closes on 6 February 20251.
The consultation covers what Ofgem calls the debt pathway, split into debt prevention, debt support and debt recovery1. It seeks views on a consumer debt outcome, standardisation of ability to pay assessments, and improved working between suppliers and consumer groups and charities1. Ofgem said the scope is focused on the domestic retail market and does not cover financial interventions to support customers in debt or arrears, affordability interventions to tackle the cost of energy, or the role of suppliers in funding debt advice1.
"We are consulting on ways to improve debt standards in the domestic retail market."
The document sets out several measures of the problem. In Q3 2024, arrears accounted for 75 per cent of the total value of debt and arrears, and 57 per cent of domestic accounts in debt or arrears were not on a repayment plan1. Ofgem's SOR data shows around 66,000 failed electricity debt repayment arrangements in Q3 2024 across all payment methods, the most since it began collecting these data in 20161. Within that, failed arrangements between £0.01 and £2.99 numbered around 26,000 in Q3 2024, a 100 per cent increase compared with Q3 20231.
On contact with suppliers, Ofgem's research found that 18 per cent of customers falling behind on bills or running out of credit reported being proactively contacted by their supplier about support; 53 per cent said they contacted their supplier and 27 per cent said they had no contact about help with paying bills1. Ofgem also cited consumer groups: energy debt is now the single most common type of debt that Citizens Advice deals with, and energy arrears are the most common type of priority debt StepChange clients face, with 42 per cent of clients who pay an energy bill in arrears1.
| Measure | Figure |
|---|---|
| Debt and arrears, September 2024 | £3.82 billion |
| Increase over two years | 91% (£1.82 billion) |
| Arrears as share of total debt and arrears, Q3 2024 | 75% |
| Accounts in debt or arrears not on a repayment plan | 57% |
| Failed electricity debt repayment arrangements, Q3 2024 | around 66,000 |
Ofgem also noted that it last increased the Debt Assignment Protocol threshold from £200 per fuel to £500 per fuel in 20151. The consultation is published alongside Ofgem's overarching debt strategy and a separate consultation on a debt relief scheme1.
Why it matters for households
The figures describe the stock of unpaid household energy bills rather than the price of energy itself. For a household carrying arrears, the debt sits alongside ongoing charges, and the data show that most of the value is arrears rather than debt on closed accounts1. The finding that 57 per cent of accounts in debt or arrears were not on a repayment plan indicates that a large share of households have no agreed schedule for clearing what they owe1. The energy debt and arrears statistics page sets out the wider series.
The contact figures bear on how quickly a household learns what support exists. Ofgem's research found that fewer than one in five customers falling behind reported being proactively approached by their supplier, while more than a quarter reported no contact at all1. For a household trying to keep on top of bills, that gap between falling behind and being offered a repayment plan is the point at which arrears can accumulate. The consultation also covers standardising ability to pay assessments, which determines what a supplier treats as affordable1.
Energy independence at household level depends on a home's ability to absorb price shocks without borrowing against future bills. The rise in arrears, and the concentration of failed repayment arrangements in very small amounts, suggests many households are missing payments by sums that would once have been absorbed within a monthly budget1. Ofgem's document also links debt prevention to billing accuracy and metering, noting that accurate bills and widespread smart metering can reduce back-bills and the build-up of debt1.
What happens next
The consultation closes on 6 February 20251. Ofgem said it will consider all responses and publish the non-confidential responses alongside a decision on next steps on its website1. Responses can be sent to DebtConsultations@ofgem.gov.uk1.
Sources1 cited
- Improving debt standards in the domestic retail market, ofgem.gov.uk