Ofgem's statutory consultation on its Debt Strategy, which sets out how the Energy Debt Relief Scheme (DRS) will work, was open until 18 December 20251. The regulator confirmed the closing date in its written response to the Energy Security and Net Zero Committee, submitted on 11 February 2026 and first published as correspondence to the Committee on 25 February 20261.
The Committee had published its Fifth Report of Session 2024 to 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's response was appended to the Committee's Sixth Special Report, published on 19 March 20261.
Ofgem said it intends to deliver the DRS in two phases throughout 2026. Phase 1 would see customers confirmed as eligible for means-tested benefits receive support in the form of a write-off of historic eligible debts incurred between April 2022 and March 2024. Ofgem said Phase 1 should help 200,000 customers and remove up to £500 million of the debt stock1. Phase 2 would be targeted at customers not eligible for Phase 1 but nonetheless in genuine payment difficulty, identified through an enhanced income and expenditure assessment process1.
On funding, Ofgem did not agree with the Committee's recommendation that windfall profits from energy network companies should support the DRS. Following stakeholder consultation, Ofgem said it is instead proposing to recover DRS costs from domestic customers, through standing charges for electricity customers and volume charges for gas customers1. The Committee had argued that networks "have enjoyed windfall profits of around £4bn through financial outperformance of network price controls"1.
"Our intention is to deliver the DRS in two phases throughout 2026, with Phase 1 seeing customers who are confirmed to be eligible for means-tested benefits receive support in the form of a write-off of historic eligible debts incurred between April 2022 and March 2024."
Ofgem also set out the scale of the debt position. By June 2025, domestic consumer energy debt had reached £4.43 billion, an increase of 71% since 2023, with a total of 2.44 million consumers in debt1. Ofgem said energy debt is disproportionately held by the 30% lowest earners1. The Committee described a "severe energy debt crisis", noting millions of customers owe more than £4bn in debt and arrears, a record figure that has more than tripled in just five years1.
Ofgem stated that it does not expect the DRS to remain a permanent feature of the energy market, citing the risk of moral hazard, and described it as a one-time support mechanism1. It also said it wrote to suppliers and consumer groups in August 2025 to clarify expectations about how Additional Support Credit should be provided, and intends to consider further reforms to it as part of a holistic review into access to credit in the energy sector1. Timings for that work have not been reported1.
Why it matters for households
The DRS is aimed at a specific slice of historic debt rather than at bills in general. Phase 1 support is tied to debts run up between April 2022 and March 2024 and to households confirmed as receiving means-tested benefits, so eligibility depends on both the age of the debt and the household's benefit status1. Ofgem's own estimate is that this reaches 200,000 customers and clears up to £500 million of a £4.43 billion domestic debt stock1.
The funding route matters for every household with a meter. Because Ofgem proposes to recover DRS costs through electricity standing charges and gas volume charges, the cost is spread across domestic customers rather than met from network company profits, which is the route the Committee recommended1. Ofgem described the DRS in isolation as carrying a small net cost to consumers1. For a household's energy independence, the practical effect is that the scheme addresses arrears already owed rather than the ongoing cost of each unit used, and it does not change the wholesale, policy and network components that make up the bulk of a typical bill1.
What happens next
Ofgem's stated plan is delivery of the DRS in two phases throughout 2026, with Phase 1 covering eligible means-tested benefit recipients and Phase 2 covering other customers in genuine payment difficulty1. Ofgem has said it will provide further thinking on the timings of its access to credit review as its strategy evolves1. No dates for the start of either phase, or for the outcome of the statutory consultation, have been reported1.
Sources1 cited
- Tackling the energy cost crisis: Ofgem Response, publications.parliament.uk