Ofgem consulted in December 2024 on a proposed, one-off Energy Debt Relief Scheme, according to a House of Commons Energy Security and Net Zero Committee report published on 29 October 20251. The committee's report, the fifth of session 2024 to 26 and part of its inquiry into the cost of energy, states that the scheme could support up to 2.3 million customers and write off between £0.5bn and £1bn of crisis-era energy debt1.
The committee's summary lists "introducing a social tariff and an ambitious Energy Debt Relief Scheme" among its key recommendations to the Government1. It also recommends reforming the Warm Home Discount so that it is more responsive to rising wholesale prices and targeted based on household need, and expanding the powers of the Energy Ombudsman so that consumers can achieve redress when billing issues occur1.
"In December 2024, Ofgem consulted on a proposed, one-off Energy Debt Relief Scheme"
The report sets the scheme against record levels of household energy debt. Domestic energy consumer debt totalled £4.15bn at the beginning of 2025, the highest since records began1. A typical domestic consumer pays around £1,720 a year for electricity and gas under the Energy Price Cap, against £993 for a typical household in winter 2020 to 211. The committee says the cap is almost 75 percent higher today than in winter 2020 to 211.
The report also records related regulatory activity. In February 2025, Ofgem announced and consulted on plans to require every energy supplier to offer energy tariffs with low or no standing charges, and announced that it would fine suppliers that continue to breach its back billing rules1. In July 2025, Ofgem reforms to how costs are calculated under the Energy Price Cap meant the typical electricity standing charge fell by five percent and the typical gas standing charge by nine percent compared with the previous cap period1. The committee attributes part of the rise in standing charges to the implementation of Ofgem's Targeted Charging Review in 2022 to 23, which redistributed network costs from the unit rate to the standing charge1.
On winter support, the report notes that in June 2025 the Government announced that all named bill payers receiving certain means-tested benefits in England and Wales would be eligible for the Warm Home Discount from winter 2025 to 261. It states that the social tariff was replaced by the Warm Home Discount in 2011, and that the discount's value has failed to keep pace with the soaring cost of energy1.
Why it matters for households
Energy debt relief of this kind would act on money already owed rather than on the rate charged for each unit used. For a household carrying arrears, a write-off would reduce the balance a supplier is pursuing and, in turn, the amount recovered through a repayment plan added to an ongoing bill. The committee's figures put the potential scope at up to 2.3 million customers and £0.5bn to £1bn, against total domestic energy debt of £4.15bn at the beginning of 20251.
The report frames the scheme alongside a social tariff, which would change how bills are calculated rather than clearing past balances. Standing charges matter here because they are paid regardless of how much energy a home uses, so they bear hardest on low-consumption and low-income households; the committee heard that standing charges have risen significantly in recent years with a disproportionate impact on low income consumers1. Ofgem's July 2025 calculation changes reduced typical standing charges, but the committee links part of their earlier rise to the Targeted Charging Review1.
For a household's energy independence, the practical effect of debt relief is limited to the arrears position. It does not change the unit rate, the standing charge or the wholesale costs that the report says account for more than a third of a typical domestic electricity bill and half of a typical domestic gas bill1. The report notes that the UK's electricity price is usually set by the marginal cost of gas generation, which it says set the price 98 percent of the time in 20231.
What happens next
The report is a committee report with recommendations to government, and the Government has two months to respond1. The committee states that its second report will cover matters affecting the retail energy market, including wholesale markets, policy costs, network and transmission charges and new technologies1. No date has been reported for a government decision on the Energy Debt Relief Scheme itself.
Sources1 cited
- Tackling the energy cost crisis, publications.parliament.uk