Ofgem published a statutory consultation on the introduction of the Debt Relief Scheme (DRS) on 6 November 2025, setting out revised proposals for how the scheme should operate and draft licence conditions for gas and electricity suppliers and network companies1. The consultation closes on 18 December 20251.
The engagement condition has changed from the version set out in the August 2025 working paper. Under the revised proposal, "customers will have to take positive action to meet the condition, rather than for suppliers to discuss with the customer"1. Ofgem states that the criteria is met if a customer has made a payment during their most recent billing period, that prepayment customers should be eligible if they top up their existing consumption, and that direct debit customers with a "live" direct debit should be considered to be contributing to their consumption1. Ofgem also proposes not to use smart meter installation as a route to meet the engagement condition1.
The scheme would write off eligible debt accrued between 1 April 2022 and 31 March 2024, the energy crisis period, for customers eligible for means-tested benefits in Phase 11. Ofgem proposes a floor of £100 on the level of eligible debt and a cap on relief at the total value of a customer's eligible debt as it stands on the date of the consultation's publication1. Only closed accounts where the customer is actively engaging with their supplier, such as making efforts to repay their energy crisis debt regardless of change in residence or supplier, would be eligible1. Suppliers would be reimbursed at the market value of the debt written off, with costs recovered from networks through higher network charges1.
"We are consulting on the introduction of the Debt Relief Scheme."
Ofgem says total energy debt and arrears reached £4.4 billion in Q2 2025, a 20% increase over the previous 12 months, and that this debt is disproportionately held by consumers in the bottom 30% of earners1. The consultation follows a policy consultation in December 2024 and two working papers in May and August 20251.
| Milestone | Date |
|---|---|
| Consultation response deadline | 18 December 2025 |
| Publication of DRS Decision | January 2026 |
| DRS licence changes come into force | Q1 2026 |
| DRS Phase 1 Launch | Early 2026 |
| Licence modifications effective | April 2026 |
| DRS Phase 1 Closes to Applications | Q1 2027 |
| First Phase 1 Claim Payment | Q2 2027 |
Source: Ofgem1
Why it matters for households
The DRS is a one-off, time-limited intervention aimed at historic debt built up during the energy crisis, not at ongoing bills1. For a household carrying eligible arrears from April 2022 to March 2024, the scheme could mean part or all of that debt being written off, subject to the £100 floor and the cap at the value of eligible debt on the consultation date1. Eligibility in Phase 1 depends on being eligible for means-tested benefits, with suppliers identifying customers through billing systems and matching with Department for Work and Pensions data, subject to separate legislation1.
The engagement condition matters because it determines which households can access relief. A customer who has made a payment in their most recent billing period, topped up a prepayment meter, or holds a live direct debit would meet the condition under the proposals1. Ofgem says suppliers should allow eligible Phase 1 customers to access support throughout the scheme lifetime1. The scheme is expected to present a short-term increase in costs for consumers through network charges, with Ofgem stating that over the longer term it could deliver net benefits by reducing aggregate debt1. The regulation-policy hub carries related coverage.
What happens next
Ofgem intends to publish a decision on the proposed licence changes in January 2026, with licence modifications expected to become effective from April 2026 in both the gas distribution and electricity distribution sectors1. Ofgem notes there will be a time-lag between suppliers beginning to write off debt in Q1 2026 and submitting scheme claims from Q2 2026, with networks beginning monthly payments from May 20271. Delivery in early 2026 is subject to consultation feedback and to changes in legislation allowing data sharing between the Department for Work and Pensions and suppliers1. Phase 2, targeting customers in genuine payment difficulty who are not eligible for means-tested benefits, is intended for later in 20261.
Sources1 cited
- Debt Relief Scheme: Statutory Consultation, ofgem.gov.uk