Blog
Are we ignoring a £1.8bn debt problem in business energy?
Energy suppliers and small businesses in the UK are at risk of a hidden crisis. A crisis of up to £1.8bn in unpaid energy bills. This huge debt problem is growing silently and secretly due to gaps in visibility compared to domestic debt. And there are no industry-wide answers — yet.
Domestic energy suppliers faced £1.5bn cash coverage deficit in Q4-24
Our latest analysis indicates that domestic suppliers faced a £1.5bn cash coverage deficit at the end of Q4-24. This marks the fourth consecutive quarter in which suppliers have had to finance a shortfall in net balances - a clear departure from historical trends and a stark indication of the ongoing challenges in maintaining capital adequacy.
Energy debt hits £3.85bn, but growth slows to lowest rate since 2022
Domestic energy debt hit a record £3.85bn in Q4 2024, rising by £0.75bn over the past year. Although a seasonal increase from Q3 to Q4 is expected due to winter consumption, the latest rise of £30m was the smallest quarterly jump since 2022, indicating a potential shift in the crisis.
How to solve a problem like fuel poverty
Following the launch of our fuel poverty report in Parliament earlier this month, David Watson explored our key findings in a recent article with Utility Week.
Households spent £110m more on bills this winter, despite lower Price Caps
Households spent £110m more on their energy bills this winter, despite lower Price Caps. Analysis from John de Bono shows that while energy Price Caps were ~10% lower, many households still saw higher heating costs due to colder weather and cuts to government support.
Why is energy debt still going up?
Recent media coverage is recycling something that as an industry we’ve understood for a while – energy debt is still going up. But why? Compared to 2 years ago the macro economic picture is positive – prices have fallen significantly and incomes are outpacing inflation. This should all be driving debt down, but it’s growing.
Suppliers face prepay balancing act as additional support credits hit £150m
Understanding who in the prepayment portfolio needs support - and how much - remains critical for energy suppliers. While ~£9 of the current price cap includes a temporary allowance for bad debt, this relies on suppliers operating at a ‘notionally efficient’ level. Rachel Littlewood and the team outline five steps to help you enhance your approach, and strike the right balance between support, operating costs, and bad debt.
Domestic suppliers will need to make up £250m cash shortfall
Domestic energy suppliers faced a £250m cash coverage deficit at end of Q3. For the third consecutive quarter, suppliers had to finance a shortfall in net balances, even as customer credit balances reached their seasonal peak. It marks a shift from previous years, when suppliers had a positive net cash position during this period.
Energy debt hits record £3.8bn, as Ofgem propose initiatives to raise standards
Energy debt has reached a new high of £3.8bn as of Q3-24, up £134m from the previous quarter, and £0.9bn over the past year. Alarmingly, £2.9bn (75%) of this debt remains without any repayment arrangement in place, with 2m customers in this bracket. Total debt has almost tripled since 2020, and the volume of customers without repayment arrangements is up 700k (55%) in the same period.
Tailoring service for prepay is more critical than ever this winter
Demand from prepayment customers is expected to rise by 50% in winter, and with affordability challenges at unprecedented levels, bespoke service is needed more than ever. We look at what's needed to address the immediate impact here, laying the foundations for a sustainable, long-term approach.
Energy bills to rise ~£800m after Winter Fuel Payment cut
Analysis from BFY Group shows the ~10m customers losing their Winter Fuel Payment will pay an additional ~£800m in energy bills this winter vs last.
Typical DD customers are ~1.7x monthly payments in credit
As we head into winter, typical Direct Debit (DD) customers are in credit by ~1.7x their monthly payment. With c.70% domestic energy customers choosing to pay by DD, payment adequacy is critical for supplier health.
Subscribe today to receive the latest news and updates from BFY
By submitting my personal data, I consent to BFY collecting, processing, and storing my information in accordance with our Privacy Policy.