Government urges energy companies to aid households facing bill backlogs

Energy executives participated in a roundtable discussion on Thursday to address the government’s strategy to address the energy debts of approximately 2.4 million vulnerable households. This initiative is part of a broader “circuit-breaker” approach announced by the chancellor during the annual budget statement last month. The overall household energy debt is projected to reach £7 billion by the end of the year.

Energy consumers minister Polly Billington emphasized that energy companies must continue to play a “crucial role” in resolving the persistent problem of debt, even with the government’s substantial financial support. She urged suppliers to proactively identify customers facing financial difficulties and offer assistance, such as payment plans and referrals to debt advice services.

The government intends to collaborate with the energy sector to streamline the identification of households needing support and to modernize payment systems for greater ease of use. Smart meters and advanced pre-payment meters are being promoted to enable households to monitor their spending and avoid accumulating arrears.

One attendee described the government’s plans as demonstrating “clearly a lot of ambition,” with the goal of bringing together suppliers and consumer groups to ensure successful implementation. The meeting included representatives from Octopus Energy, British Gas, EDF Energy, Energy UK, National Energy Action, and five consumer advice groups, including Citizens Advice.

“I know that energy debt weighs heavily on millions of families across the country. That affects all of us, with the costs passed on to other billpayers,” stated Billington. Currently, the average household pays approximately £50 annually to cover unpaid energy bills, a figure that could increase without intervention.

The government estimates that the one-time debt relief scheme and preventative measures could save households an average of £130 over the next decade.

“That is exactly why we’re bringing in measures to help vulnerable households that have been in energy debt since the energy crisis a few years ago. Energy is an essential and making it affordable for everyone is our top priority,” Billington added.

Gillian Cooper, director of energy at Citizens Advice, stressed the importance of the initiative not only addressing existing debt but also implementing safeguards to prevent future accumulation, especially with anticipated bill increases in January.

Approximately 40% of unpaid bills arise during the moving process. The government plans to address this through reforms, including requiring landlords to provide meter readings and moving dates to suppliers when tenants move.

Rachel Fletcher, a director at Octopus Energy, expressed support for the focus on preventing customers from falling into debt, stating, “Nothing in this package should weaken suppliers’ incentive to keep innovating and investing to help customers avoid and manage debt.”