Energy regulator Ofgem and the Government have announced a new Debt Relief Scheme aimed at households weighed down by energy debt built up during the 2022 to 2024 energy crisis. The scheme is scheduled to launch in spring 2027 and forms part of a wider strategy described as a circuit breaker for household energy debt.

Who could qualify for support

The regulator said the total debt and arrears covered by the scheme amount to £2.47 billion. Up to 2.4 million customers who have little realistic prospect of repaying what they owe could be considered for support. The sum eventually written off will depend on customers engaging with suppliers.

Wider reforms to stop debt returning

Support is targeted at households in genuine financial need. According to the Government, a household will be eligible if the billpayer receives means-tested benefits, disability benefits, or is a pensioner, and the debt was built up since the energy crisis of 2022 to 2024. Eligible households will also need to take steps to re-engage with paying their debt through their supplier.

The scheme will be delivered in a single phase. Ofgem will consult shortly on the final design, so households cannot apply yet.

The debt relief measure sits alongside broader reforms intended to tackle the root causes of energy debt. These include home-moves improvements and a review of involuntary prepayment meter rules.

Ofgem is also reviewing how customers pay, including Smart Pay As You Go, which it said could save a typical household around £20 a year. Government analysis suggested the overall strategy could save a typical household around £130 over the next ten years by avoiding the cost of debt being spread across all billpayers, and could prevent more than £5 billion of new debt accumulating by 2036.

Sources: Ofgem and GOV.UK.