Ofgem’s interim boss has warned energy debt has become a growing crisis, with households who are paying their bills now carrying part of the cost for those who are not.
Tim Jarvis, Interim Chief Executive at Ofgem, used his Utility Week Live speech to argue the regulator must protect consumers while also enabling investment, innovation and electrification across the energy system.
He said domestic consumer energy debt has now reached more than £4.5bn, up 20% on 2024 and 71% since 2023.
Jarvis said around three quarters of that debt is more than 91 days overdue with no repayment plan in place.
He said: “Now much of that debt accrued during the extended cost of living crisis. And most people in debt are not there out of choice – the affordability pressures are very real and have been.”
But he warned the burden is now being spread across the wider customer base.
Jarvis said: “Direct debit customers are paying around £50 a year towards the cost of managing and writing off energy debt. Customers on Standard Credit pay significantly more.”
He added: “Energy cannot become a source of free or cheap credit by default.”
Jarvis said the way the sector tackles debt has to change, with suppliers expected to bill accurately, intervene earlier and offer sustainable repayment routes.
He said consumers who can pay should do so, while Ofgem must enable responsible debt recovery alongside protections for those genuinely needing support.
The regulator is preparing to progress a Debt Relief Scheme which could write off up to £400m of debt built up during the last energy crisis.
Jarvis also said Ofgem will consult this summer on changes around the home moving process, where he said around a third of debt builds up.
On consumer protection, Jarvis said Ofgem’s role remains rooted in protecting households, particularly vulnerable people.
He said: “Energy is not a nice to have; it is an essential service and that gives us as regulator and those who supply it particular responsibilities.”
But he said long-term consumer protection also depends on building a sector that can invest, innovate and serve customers better.
Jarvis said: “I am asking the sector to go further – to go over and above in serving consumers, because in a more volatile and uncertain world, that higher standard is what people expect and need.”
The speech also set out Ofgem’s shift towards faster, more targeted and more outcomes-based regulation.
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