Committee publishes Tackling the energy cost crisis report

The Energy Security and Net Zero Committee published its Fifth Report of Session 2024-26, Tackling the energy cost crisis (HC 736), on 29 October 2025¹. The Government's Response was received on 5 January 2026 and published as the Committee's Fourth Special Report on 21 January 2026¹. Ofgem submitted its response to the Report on 11 February 2026, first published as correspondence to the Committee on 25 February 2026 and appended to a special report dated 19 March 2026¹.

Ofgem told the Committee it cannot unilaterally reduce energy costs for businesses or consumers¹. It set out what makes up a typical domestic bill under the price cap for January to March 2026: around one third (35%) is driven by wholesale gas and electricity costs, policy costs set by Government including support scheme levies represent around 17%, network costs about 23%, and supplier operating costs including an EBIT allowance 18%¹. Ofgem said its Final Determination for RIIO-3 for the gas and electricity transmission companies and the gas distribution networks was published on 4 December 2025¹.

On debt, Ofgem said domestic consumer energy debt had reached £4.43 billion by June 2025, an increase of 71% since 2023, with 2.44 million consumers in debt¹. It launched a further update to its Debt Strategy and a statutory consultation which was open until 18th December 2025¹. The Debt Relief Scheme is to be delivered in two phases through 2026: Phase 1 will write off historic eligible debts incurred between April 2022 and March 2024 for customers confirmed eligible for means-tested benefits, which Ofgem says should help 200,000 customers and remove up to £500 million of debt stock¹. Phase 2 will target customers not eligible for Phase 1 but in genuine payment difficulty¹.

Ofgem disagreed with the Committee's recommendation that windfall profits from network companies should fund the scheme, and said it is instead proposing to recover DRS costs from domestic customers, through standing charges for electricity customers and volume charges for gas customers¹. It also rejected the recommendation to set the price cap at an equal level for all payment methods from January to March 2026, saying the higher cap for standard credit reflects additional costs and risks in servicing those customers¹.

"In August 2025, we wrote to suppliers and consumer groups to clarify expectations about how Additional Support Credit should be provided to ensure the most vulnerable households are supported, while preventing households getting into debts they cannot manage."

Why it matters for households

The report and Ofgem's reply set out where the money in a household bill goes and who controls each part. Ofgem states plainly that it cannot unilaterally cut costs, and that questions such as whether there should be a social tariff, and how it would be set, are for Government¹. That places the levers for the largest non-wholesale elements, including policy costs, outside the regulator.

For homes already in arrears, the practical detail is the two-phase Debt Relief Scheme and its funding. Ofgem's chosen route recovers the cost from domestic customers through standing charges and gas volume charges, which means the cost is spread across bills rather than taken from network company profits as the Committee recommended¹. The Committee's own figures, quoted in Ofgem's response, put debt at more than £4 billion and record levels¹. Ofgem's figures put the total at £4.43 billion by June 2025¹.

The disagreement over the price cap matters to any household paying by standard credit, cash or cheque rather than direct debit, because the Committee wanted one cap level for all payment methods and Ofgem declined¹. Ofgem also said it will consider further reforms to Additional Support Credit as part of a review into access to credit in the energy sector, with timings to follow¹. No date has been reported for that review.

What happens next

Ofgem intends to deliver the Debt Relief Scheme in two phases throughout 2026, with Phase 1 covering eligible debts from April 2022 to March 2024¹. The statutory consultation on the scheme closed on 18th December 2025¹. Ofgem said it will provide further thinking on the timings of its access to credit review as its strategy evolves¹. The Government's Response was published on 21 January 2026¹.

Sources1 cited

1. Tackling the energy cost crisis: Ofgem Response, publications.parliament.uk