Ofgem has rejected calls from MPs to force energy companies to write off £1 billion of customer debt after intense energy industry lobbying, DeSmog can reveal.
In October, MPs sitting on the Energy Security and Net Zero Committee told the regulator that excess returns made by the industry from soaring energy prices since 2021 should be used to fund a debt relief scheme.
The recommendations were also backed by Citizens Advice, which said that energy network operators had a “social obligation to contribute to alleviating the hardship of those affected by the cost of living crisis” after having “made genuine windfall profits” during the energy crisis.
Last week, Ofgem rejected the committee’s proposal, writing that it instead planned to recoup the costs through energy bills “following extensive stakeholder consultation”.
Documents submitted to the watchdog’s consultation reveal that energy companies pushed back strongly against having to fund the scheme.
Cadent, the UK’s largest gas distribution network, said the “proposed debt relief scheme is not an appropriate way to address the debt challenge” and suggested that it could lead to inequities between “consumers who decided to prioritise energy bill payments versus others who opted to use their limited disposable income on other essentials”.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “The suggestion from some network companies that indebted households may have chosen to spend their money on ‘other essentials’ rather than energy bills shows how detached parts of this industry have become from the reality facing millions of people across the UK.”
Northern Gas Networks said it did not support the introduction of a debt relief scheme and that requiring network operators to fund it would put their financial stability at risk. SP Energy Networks also argued that financing debt write-off “risks adversely affecting NWOs’ financeability and future cost of Capital”.
The Energy Security and Net Zero Committee pointed out that energy network companies made £4 billion in excess returns since 2021, in a report on the energy crisis published in October. They stated that this figure “coincidentally, is almost equal to the total value of consumer energy debt”, which sat at approximately £4.15 billion at the beginning of 2025.
The report argued these profits were not necessarily earned through performance but resulted from “flaws in the price control system” that overestimated the impact of inflation on the networks’ borrowing costs.
Several retail energy suppliers also lobbied against having to fund the scheme, including Ecotricity, run by Labour-donor Dale Vince, which said that the “costs of debt relief should be met through general taxation” rather than energy companies. Centrica (British Gas), the UK’s largest gas supplier, said that the funding of a debt relief scheme should be “cost neutral” for the individual suppliers delivering it.
Energy UK, the trade association for the energy industry, told Ofgem that the scheme “should not be paid for by energy suppliers”, writing that “they do not have the financial capacity to fund this scheme”.
A report by Unite published in 2025 said that the UK’s energy network operators made combined pre-tax profits of £6.8 billion in 2024 and had an average profit margin of 38 percent in comparison to 7 percent across the economy as a whole. It found that energy suppliers declared profits of £2.8 billion that same year but that their profit margins were far lower at 5 percent.
Several organisations responded to Ofgem’s consultation calling on the regulator to use excess returns to fund a debt relief scheme.
Leeds City Council cited research by the End Fuel Poverty Coalition which found that 20 energy companies made £483 billion in profits since the start of the crisis and argued that “it therefore does not seem reasonable for customers to pay increased prices” to fund the scheme.
Groundwork UK, an environmental charity, said that the “huge increase in supplier profits should be used to support vulnerable households”, while Money Advice Trust urged Ofgem to look at “supplier-contribution funds”.
Debt Justice told DeSmog that energy companies lobbying against funding the scheme “turns the stomach”.
Toby Murray, the organisation’s policy and campaigns manager, said: “With another crisis looming, the government must get serious. Ofgem’s debt relief scheme is long overdue being rolled out. It must be prioritised and funded from energy company profits, not customers who can’t afford yet higher bills.”
An Ofgem spokesperson said its decision was “based on the risk that reopening the price control could lead to other costs to consumers that outweigh the potential benefits from recovering any gains.”
A Cadent spokesperson said, “We have supported Ofgem through the process and we recognise the societal importance of addressing energy debt and welcome targeted interventions that support those most in need.”
A spokesperson for Future Energy Networks, which represents several network operators, said: “Gas network operators remain committed to supporting vulnerable customers and working across the industry to tackle the very real problem of high consumer debt, including by ensuring that any returns generated adhere to the strict regulatory framework set by Ofgem.”
