£4.5 billion and counting: What the scale of energy debt means for collections in 2026

The scale of domestic consumer energy debt has soared to £4.5 billion. That’s up 20% on 2024, and a staggering 71% since 2023. Three quarters of it is more than 91 days overdue and has no repayment plan in place.

Speaking at Utility Week Live in May, Ofgem’s Interim CEO Tim Jarvis didn’t mince his words: household debt is one of the biggest challenges facing the energy sector.

And it’s about to get even harder. From July, the Ofgem price cap rises 13%, pushing the typical dual-fuel household bill to £1,862 a year. Gas bills alone are going up 24%. A further rise is expected in October. The war in the Middle East has driven wholesale gas prices up by around 70% compared to pre-crisis forecasts and experts at LCP Delta are warning this isn’t a short-term blip. Britain could be facing a years-long energy shock.

Collections teams must review their practices now to focus on identifying and supporting the growing numbers of vulnerable customers with energy debt. The ones that do will be the ones who successfully reduce debt through this difficult time.

The pipeline is filling up – those on the edge of energy debt are at risk

Average energy debt per household has already climbed from £1,848 in 2023–24 to £2,270 in 2025–26. Add a 13% price cap rise on top of that, and the maths is unforgiving for the customers sitting on the edge of affordability.

We know from Citizens Advice data, that in October 2025, 4 million people were in a negative budget and half a million more were on the cusp of a crisis (source). As Jarvis acknowledged at Utility Week Live: “Most people in debt are not there out of choice – the affordability pressures are very real and have been.” The cost-of-living crisis didn’t end, it just evolved.

For collections managers, this highlights the real need to be able to understand a customer’s situation and circumstances. Treating a structurally unaffordable situation like a willingness-to-pay problem will produce poor and often harmful outcomes for customers as well as burn resource and risk complaints.

Regulation has shifted too. Alongside their Debt Relief Scheme to write off up to £400 million of debt, Ofgem is explicitly calling for suppliers to intervene earlier, offer sustainable repayment routes, and compete on the quality of customer support.

The 75% problem: debt with no plan

Three quarters of energy debt over 91 days old has no repayment plan in place.

This tells us that somewhere between the bill going unpaid and the debt aging badly, the conversation isn’t happening. Customers aren’t engaging or aren’t being reached in a way that works for them or makes them feel safe enough to disclose their situation. Traditional collection methods including letters, calls and visits are not creating outcomes.

This is where the approach to collections genuinely must change. Swapping from a focus on contact and volumes to “how do we have conversations that actually lead somewhere?”. Many organisations are starting to recognise this and are already seeing the benefit, for both their own objectives and KPIs, and the resilience of their customers.

Increasing repayment plans: what actually works

The evidence is clear – when customers feel heard and supported, instead of chased, they engage. Digital wellbeing tools like TellJO’s wellbeing check are demonstrating this at scale. Over 90% of customers who complete a TellJO wellbeing check go on to set up a repayment plan.

When you help someone understand what support is available to them, for their debt, their mental health and their wider wellbeing, they feel more able to move from avoidance to action. A wellbeing check creates a moment of genuine engagement rather than confrontation, and that makes all the difference.

What to do before the higher bills land

The window between now and higher bills is short. But collections teams who use it well will be better positioned than those who wait for the debt to increase this winter.

A few practical priorities:

1. Segment and plan for your at-risk accounts now

Customers already carrying arrears who are on standard variable tariffs face the sharpest impact. Work with vulnerable customer and support teams to identify areas where these customers can access further support and (this is key) proactively offer it before winter bills arrive.

2. Review your repayment plans

With budgets tightening further, plans set months ago may no longer be sustainable for customers. Proactive affordability reviews now will prevent re-defaults later. You can combine this with a wellbeing check to ensure customers have access to all the support they need.

3. Check your vulnerable customer processes

Ofgem’s regulatory expectations around vulnerability identification and reasonable adjustment are only going to intensify as bills rise. Tim Jarvis singled this out in his Utility Week speech: “It means suppliers must bill accurately and on time, intervening early with customers who are at risk – if they are falling behind before it gets out of hand, and offering sustainable and affordable repayment routes. That is a key measure on which suppliers must be able to compete. I want to make sure that those who are good at that do better than those who are not.”

4. Think about how you start conversations

If your opening move is a demand notice, you’re likely to get avoidance. If it’s a genuine offer of support, you’re more likely to get engagement. There’s more advice here on how to create a winning disclosure environment.

5. Understand your customer’s frame of mind

Citizens Advice has some useful data tables on the cost-of-living crisis showing trends across things like debt, energy debt and food bank referrals cross referenced by demographic groups like household type, disability and housing tenure. TellJO’s Wellbeing Index also shows the percent of wellbeing check responders facing suicidal thoughts, domestic abuse and other characteristics of vulnerability. The better you understand your customers the more likely you’ll be able to work together to reduce customer debt.

A final note

The time to review practices is now. Collections teams who respond with smarter, more human-centred approaches will recover more, protect customers better and stay ahead of regulation.