Almost one in four households in the UK are falling behind on their energy bills, revealing the ongoing struggles of families to pay their bills despite a drop in global energy prices over the past two years. A recent report by consultancy Baringa shows that 24% of households are late with payments. This figure has increased from 18% in December 2024, although it’s down from 29% in May 2022, following a spike in prices linked to Russia’s actions in Ukraine.
The report indicates that those who haven’t set up repayment plans owe an average of £1,700. About 71% of all energy debt comes from households without repayment plans, with £2.3 billion of this debt now over a year overdue. James Cooper, a partner at Baringa, expressed concern that rising debt levels are creating a troubling cycle for the energy industry.
Cooper emphasized the need for urgent solutions to tackle this debt issue and prevent further financial strain on families. Baringa’s findings stand in contrast to the approach of regulator Ofgem, which defines energy debt only for payments that are at least 90 days overdue, suggesting that only 6.5% of households are in debt under its criteria. Baringa argues that its statistics more accurately represent the current state of household energy debts.
These alarming figures highlight the precarious state of the energy market, which has yet to fully recover from the surge in wholesale prices that began in late 2021. While government support has been gradually reduced as prices have stabilized, average energy bills remain significantly higher than before the crisis.
Energy providers have also accepted stricter guidelines about when they can impose pre-payment meters, particularly to protect vulnerable individuals. Andrew Ward, the chief executive of Scottish Power’s household energy division, remarked on the troubling trend of increasing debts as winter approaches, pointing to a lack of viable solutions.
Ofgem allows energy companies to recover some bad debts from all consumers’ energy bills. Recent analysis shows that the average customer is now paying around £64.67 annually to cover these costs, a significant increase from about £40 during summer 2022.
As part of new industry rules, energy companies cannot force pre-payment meters on homes with very young children or individuals with serious health issues. Philippe Commaret, EDF’s UK managing director, stated that while it’s essential to protect vulnerable customers, there are concerns about people exploiting these protections, leading to higher bills for everyone.
Ofgem has implemented stricter measures to help energy companies identify struggling customers and assist them with affordable repayment options or emergency credits. The regulator is also collaborating with the government on a new debt relief plan aimed at giving much-needed support to households burdened with heavy debts.