Energy bills could rise by an additional £75 per year for millions of customers as the UK’s energy debt reaches an estimated £7 billion, according to a new report from EDF Energy. The company described the situation as 'out of control.'
Current Debt Allowance and Proposed Increases
Ofgem, the energy regulator, currently permits suppliers to add a debt allowance to household bills under the price cap. This allowance, which covers unpaid debts that are written off, now stands at £52 per year per household. However, with total debt surging to record levels, industry experts suggest that an extra £10 to £15 per year would be required to address the £7 billion debt, but EDF’s analysis indicates a steeper rise of £75 annually for its five million customers.
Record High Debt Levels
Figures published by Ofgem in September showed that money owed to suppliers by households in England, Scotland, and Wales reached a new record high of £4.4 billion by the end of June 2025. The average debt for households without a repayment plan is approximately £1,716. In a worst-case scenario, between £1.1 billion and £1.7 billion of historic debt is never paid and will be written off.
Previous and Upcoming Price Cap Changes
Last year, Ofgem announced plans to increase annual energy costs by £5 per household in 2027 and 2028. However, the regulator noted that the actual increase could be lower depending on how the scheme is implemented, and that it might be offset by reductions in debt-related costs. The current price cap, set in April, is £1,641 per year for a typical UK home. This was before the conflict in Iran caused a spike in wholesale energy costs, which is expected to be reflected in the next cap announcement, due in July.
Impact of Global Events
According to Cornwall Insight, the new cap could mean an increase of £288, or 18%, in annual bills. The consultancy firm stated that 'infrastructure damage and continued disruption to marine traffic through the Strait of Hormuz are limiting the potential for any meaningful wholesale price fall.' This comes after energy market experts predicted a nearly 20% rise in household energy prices when the summer cap is announced.
EDF’s report underscores the growing burden on paying customers, who are effectively subsidizing those who cannot or do not pay their bills. The company warned that further increases could push more households into debt, creating a vicious cycle.
