Households in Great Britain could owe their energy suppliers as much as £7bn by the end of 2026, an industry group has warned. This potential increase follows higher gas and electricity prices forecast for the winter period.
Domestic energy debt and arrears rose by approximately £500m over the past year, reaching a record £6bn by the end of June. This rise is attributed to the ongoing Middle East conflict, which has continued to drive up gas market prices.
Energy UK, a trade association, anticipates that the amount of energy debt unpaid for over 30 days is likely to accelerate to £7bn by the end of the year. This comes as the government's cap on gas and electricity prices is expected to climb to a three-year high.
The regulator is expected to confirm a 4% increase on the energy price cap for millions of households from October. Dhara Vyas, Energy UK's chief executive, stated that "too many households continue to feel the strain of high energy bills."
This increase is expected to more than offset the impact of the new prime minister's promise to cut VAT from household electricity bills from October, which aimed to reduce bills by an average of about £45 a year. Ms Vyas urged Andy Burnham's government last week to consider a "targeted and more permanent" solution, such as a social discount tariff, instead of relying on "stopgap, ad hoc or emergency measures."
Forecasters at Cornwall Insight predict that the forecast energy price cap rise means a typical household could face a gas and electricity bill equivalent to £1,729 a year over the final three months of 2026. Electricity rates are expected to rise from 26.11p to 26.57p per kilowatt hour, and gas charges from 7.33p to 7.90p for direct debit customers.
Energy UK informed journalists that the rising cost of sourcing gas from the global wholesale market is the primary factor contributing to the expected price rise, with the expense of upgrading Great Britain's energy networks also playing a larger role.