Ofgem has today announced plans to “reset and reform” how energy debt is handled, including a new Debt Relief Scheme that aims to write off up to £500m of historic arrears for around 195,000 households.
The regulator says the first phase will focus on people on means-tested benefits with debts built up during the energy crisis, alongside new rules to support customers in difficulty and reforms designed to stop debt building up in future.
Ofgem also plans trials to change how energy accounts are set up when people move home, and will introduce a new “Know Your Rights” guide for consumers. The full consultation will be published in the coming weeks, with the scheme expected to launch in early 2026.
A spokesperson for the End Fuel Poverty Coalition, commented:
“We welcome Ofgem recognising the scale of the energy debt crisis and we are broadly supportive of the Debt Relief Scheme, but announcing plans before the consultation is even published raises questions about whether they’ve been bounced into action by this week’s Energy Select Committee report.
“In this report, MPs got it right: this energy debt crisis needs bolder, faster action and must be funded through excess energy industry profits, not pushed back onto struggling households.
“Bill-payers have already handed over hundreds of millions to cover debt recovery, yet energy debt has spiralled to £4.4bn. The current system has clearly failed, and unless Ofgem is given the powers to protect consumers properly, this crisis will keep repeating every winter.”