Energy debt hits record £4.79bn as price cap jumps 13%

Household energy debt in the UK has hit a record £4.79 billion, with the October price cap set to rise by 13%, the highest increase since the crisis of 2022. The London Evening Standard and the Ealing Times report that the debt figure, owed to suppliers by households, is the highest ever recorded, surpassing the previous peak of £4.3 billion set in early 2024.

What the price cap rise means for your bills

Ofgem will announce the new cap level in late August, but the 13% increase has been widely briefed to media. For a typical household using 12,000 kWh of gas and 2,900 kWh of electricity per year, the annual bill will rise from around £1,820 to £1,940, an extra £120 a year, or £10 a month. The jump reflects higher wholesale gas prices and increased network costs, which suppliers are now passing on.

The catch is that debt levels mean suppliers are less willing to offer competitive fixed deals. The record £4.79 billion in arrears, equivalent to about £170 per household, forces companies to build bad-debt provisions into tariffs, keeping everyone’s bills higher. As the Ealing Times notes, this is a vicious circle: higher bills push more households into debt, which pushes bills higher still.

Who is most at risk

The debt is concentrated among low-income households, those in poorly insulated homes, and renters in properties with the lowest EPC ratings, typically bands D through G. A 3-bed semi with an EPC rating of D uses roughly 30% more energy than a band C home, according to government data. That means the £120 cap rise could be closer to £160 for a draughty Victorian terrace.

Meanwhile, households on prepayment meters, often the most vulnerable, face higher standing charges and fewer options to switch. The London Evening Standard reports that charities are warning of a ‘debt spiral’ as more families fall behind before winter.

Grants and upgrades that can help

The government’s Boiler Upgrade Scheme offers £7,500 off a heat pump installation, which can cut heating bills by 20-30% compared to a gas boiler. For those on low incomes, the ECO4 scheme funds full insulation, new boilers, and heat pumps at no cost. The Home Upgrade Grant (HUG2) is also open in many local authorities for off-gas-grid homes.

But uptake remains patchy. Only about 60,000 heat pump grants have been claimed since the scheme launched in 2022, far short of the government’s target of 600,000 annual installations by 2028. The London Evening Standard points out that many households don’t know they qualify, and installers are scarce in some regions.

What this means for your EPC rating

Improving your EPC from band D to band C can cut annual energy costs by £200-£400, according to the Energy Saving Trust. The Minimum Energy Efficiency Standards (MEES) already require rental properties to have at least an EPC band E, with band C proposed for new tenancies by 2028. For owner-occupiers, a better EPC adds around 5% to property value, estate agents report.

The cheapest first steps are cavity wall insulation (£500-£1,000, payback in 2-3 years), loft insulation to 270mm (£300-£500, payback in 1-2 years), and draught-proofing (under £200). Solar panels, at £5,000-£7,000 for a 4kW system, can cut electricity bills by 50% and earn export payments of about £100 a year.

Next steps for homeowners

Check your current EPC rating at gov.uk. If you’re on benefits or a low income, apply for ECO4 through your local council or energy supplier. For heat pumps, use the Boiler Upgrade Scheme’s online checker, applications take about 15 minutes. If you’re a landlord, start planning for the 2028 MEES deadline now: cavity wall and loft insulation are the quickest wins.

Finally, if you’re struggling with bills, contact your supplier for a payment plan or hardship fund. The record debt figure is a warning, not a sentence, targeted upgrades can still cut your costs by hundreds of pounds a year.