Ofgem will add £75 to every household’s annual energy bill from October 2025. The money will cover debts run up by customers who cannot pay. This is not a green levy. It is not a network charge. It is a direct transfer from households who pay on time to those who do not.
The price cap, which already sits at £1,738 for a typical dual-fuel household, will rise by roughly 4.3% on this measure alone. As The Telegraph reports, the total debt owed to suppliers now exceeds £3.7 billion. Ofgem’s solution is to spread that burden across everyone who pays by direct debit or standard credit.
Who pays the £75, and who doesn’t
Every household on a standard variable tariff will pay the extra £75. That includes the 22 million homes on direct debit, the 4 million on prepayment meters, and those on standard credit. The only households exempt are those on fixed-term deals that lock in a price before October. But those deals are rare. Most suppliers now offer tariffs within a few pounds of the cap.
The catch is that the £75 does not reduce the debt of the households who owe it. It merely prevents suppliers from collapsing under the weight of unpaid bills. Ofgem has not confirmed how the money will be recovered from those in arrears, only that the industry needs a buffer. For a typical 3-bed semi using 12,000 kWh of gas and 2,900 kWh of electricity, the £75 adds roughly £6.25 a month, about the cost of a takeaway coffee each week.
What this means for your EPC and energy costs
The rise is small in absolute terms, but it compounds. The price cap has risen by over 50% since 2021. Each quarter brings a new adjustment. The underlying problem, that too many homes are cold and inefficient, remains unsolved. Homes with an EPC rating of D or below use on average 30% more energy than those rated C or above, according to the Energy Saving Trust. That extra consumption directly feeds the debt problem.
For homeowners, the practical response is to reduce the amount of energy you buy, not just the price you pay. Insulating a loft to 270 mm costs around £500 and saves roughly £180 a year. Draught-proofing windows and doors costs under £100 and saves £40–£60. A heat pump, at £7,500–£12,000 after the Boiler Upgrade Scheme grant of £7,500, can cut heating bills by 20–30% in a well-insulated home. Solar panels, at £5,000–£7,000 for a 4 kW system, can save £200–£300 a year on electricity bills.
These upgrades do not eliminate the £75 debt levy. But they reduce the total bill by far more. A household that cuts consumption by 20% saves roughly £350 a year at current prices, five times the £75 levy.
Ofgem’s role and the wider policy gap
Ofgem has limited tools. It sets the price cap. It cannot force suppliers to write off debt. It cannot compel households to improve efficiency. The government’s Warm Home Discount provides £150 to low-income households, but that does not cover the £75 rise. The Energy Company Obligation (ECO4) scheme funds insulation and heating upgrades for low-income and vulnerable homes, but take-up is slow. In 2023, only 120,000 households received ECO4 measures out of a potential 2 million eligible.
What this misses is a structural answer. The £75 levy treats the symptom, unpaid bills, while ignoring the cause: homes that leak heat, inefficient heating systems, and a pricing system that penalises the poorest. Until the government mandates minimum EPC standards for owner-occupied homes (it has set a target of C by 2035 but no enforcement mechanism), the debt cycle will continue.
What you can do now
Check your EPC rating on the gov.uk portal. If it is D or below, book a home energy audit from a registered assessor. Apply for ECO4 funding through your local council or supplier if your household income is below £31,000. For those on standard tariffs, the £75 rise takes effect from 1 October 2025. You have six months to reduce your consumption. Insulate, draught-proof, and consider a heat pump or solar panels before winter. The levy is unavoidable. The bill is not.
Frequently Asked Questions
No. Households on fixed-price energy deals taken out before October 2025 will not see the rise until their contract ends. Everyone on the standard variable tariff, including prepayment meter customers, will pay the full £75. The rise does not apply to businesses.
Yes. The Warm Home Discount provides £150 to eligible low-income households. You can also contact your supplier for a payment plan or hardship fund. Ofgem's debt levy is built to protect suppliers, not to punish customers, but you must ask for help, suppliers are not obliged to offer it proactively.
