Ofgem published a consultation on 25 March 2026 setting out its minded-to position not to introduce any further adjustment to future cap periods to reflect differences between debt-related costs and revenues between 1 April 2022 and 30 June 20251. The review covers the temporary allowance known as the Float, which Ofgem introduced in February 2024 to reflect what it called the unprecedented increase in debt-related costs1.
The regulator said its assessment showed that debt-related allowances, including the Float, were not materially or systematically different from efficient debt-related costs1. The Float was set at £28 per dual fuel customer for additional debt costs incurred by suppliers between 1 April 2022 and 31 March 2024, applied to the cap through the adjustment allowance between 1 April 2024 and 30 June 20251. It was initially expected to last 12 months but was extended by a further three months to align with the introduction of a new higher enduring debt-related costs allowance, the DRC, which took effect on 1 July 2025, at which point the Float ended1.
Ofgem said total energy debt and arrears rose from around £1.8 billion to around £4.5 billion between October 2021 and September 2025, a two and a half times increase1. It also said it introduced the ASC allowance on 1 October 2023 in response to increased levels of ASC being provided to customers1.
"This consultation sets out our minded-to position to not introduce any further adjustment to future cap periods to reflect differences between debt-related costs and revenues between 1 April 2022 and 30 June 2025."
The consultation proposes some methodological changes for the true-up exercise, including using a weighted average benchmark metric in place of the hybrid benchmark used in the Float methodology, and including costs and revenues across all tariff types rather than only customers on variable tariffs1. Ofgem said it is also minded to make smaller technical changes to reflect the introduction of a new Earnings Before Interest and Tax allowance methodology in October 2023 and to use actual consumption data to estimate supplier revenues recovered from debt-related allowances1. Additional debt-related costs were calculated using responses to the October 2025 request for information1.
| Stage | Date |
|---|---|
| Consultation open | 26 March 2026 |
| Consultation closes | 16 June 2026 |
| Consultation outcome (decision) | August 2026 |
Ofgem said the consultation will, by exception, remain open for 12 weeks, closing 10 June 2026, to accommodate stakeholders wishing to participate in a disclosure exercise covering the underlying models and data1. The document also lists a response deadline of 16 June 2026 and a closing date of 16 June 2026 in its consultation stages1. The two dates given for the close of the consultation do not agree.
Why it matters for households
The default tariff cap, introduced on 1 January 2019 under the Domestic Gas and Electricity (Tariff Cap) Act 2018, protects households on standard variable and default tariffs1. Debt-related costs sit inside that cap, covering customer non-payment, the administration of debt processes and the cost of raising capital to finance timing differences between payment and delivery of energy1. A true-up adjustment would have changed what households pay through future cap periods to reconcile past allowances with actual costs. Ofgem's minded-to position is that no such adjustment is needed, so no further historical debt cost is added to future cap levels on this basis. The regulator said it remains able to instigate a review of the enduring debt allowance if evidence emerges of a material and systematic divergence between costs and allowances in either direction, which could include re-examining cost allocation on a forward-looking basis1. How the cap itself is set is explained in the guide to the energy price cap, and the wider remit of the regulator is covered in Ofgem: what the energy regulator does and what it covers.
What happens next
The consultation opened on 26 March 2026 and Ofgem expects to publish its decision in August 20261. Responses can be sent to priceprotectionpolicy@ofgem.gov.uk, with the contact named as Daniel Newport in the Consumer Protection & Retail Markets team1. Ofgem said it will publish non-confidential responses on its website1.