Scotland in midst of 'massive energy debt crisis', Citizens Advice Scotland warns

A leading welfare charity is demanding action from energy regulator Ofgem to tackle what it calls a “massive crisis” in household energy debt.

Citizens Advice Scotland (CAS) is calling for a new energy debt relief scheme that would support households unable to pay their energy bills.

Ofgem had launched a consultation on whether to introduce a scheme to protect consumers from the growing risk of “bad debt” in December 2023.

CAS branded the current scale of household energy debt as “unsustainable and unjust” and said a relief scheme was urgently needed.

David Hilferty, director of impact at CAS, said: “The case for an energy debt relief scheme is inarguable. Only bold, targeted and urgent action will begin to undo the harm that far too many are facing.

“Historically high energy prices have forced people into energy debt and arrears. Evidence gathered by the Citizens Advice network in Scotland shows that energy debt imposes high levels of physical, mental and emotional harm on people.

“It leaves people feeling anxious about their financial future and worried about using gas or electricity for everyday essentials like heating homes, cooking or bathing.”

Data indicates the energy price cap for April, which is renewed quarterly, is expected to increase on February 25.

Hilferty added: “The insights our network has gathered shows that energy debt creates added stress for people who are struggling with low incomes, ill health and other vulnerable situations; this is unsustainable and unjust.

“This situation is well beyond the point of tinkering at the edges. We urgently need a robust and compassionate scheme of debt relief, otherwise huge numbers of people in Scotland are going to be forced to endure further harm.”

The charity’s latest figures from 2023/24 show the average energy debt that people bring to their local CAB was £2,500 – 8% higher than the previous year.

The average energy debt per person stands at £3,130 in rural areas in Scotland, which is 30% higher than the average energy debt overall.

Ofgem confirmed a consultation into an energy debt relief scheme is ongoing.

Tim Jarvis, Ofgem’s director general for markets, said: “We know that cost of living pressure is hitting people hard and this is evident in the increase in energy debt reaching record levels.

“We have taken steps to ensure energy firms are taking better care of customers and treating people struggling with debt fairly, through our robust consumer standards, and that companies are getting in touch to offer support, such as affordable payment plans, where needed.

“However, the record level of debt in the system means we must take action to make sure suppliers can recover their reasonable costs, so the market remains resilient, and suppliers are offering consumers support in managing their debts.

“The proposals set out today are not something we take lightly. However, we feel that they are necessary to address this issue. This approach will ensure the costs are recovered fairly, without penalising a particular group of customers.

“The price cap has helped to protect consumers from a volatile gas market. However, it remains a blunt instrument in a changing energy sector, and the way it works may need to change in the future, so customers continue to be protected.”