The government’s price cap may be shielding millions from the full fury of the energy market, but it is also masking a deeper, more malignant debt crisis. As households struggle to pay, arrears are piling up like unsold inventory in a bear market. The cap, which limits the unit price suppliers can charge, has been a political salve.
But it does not address the root cause: the underlying cost of wholesale gas, which remains stubbornly high. The Office for Budget Responsibility now expects household energy debt to hit £2.9 billion by the end of the year, up from £2.
1 billion in 2024. That is a 38% hike, and it signals a toxic mixture of suppressed prices and soaring consumption. The price cap is a blunt instrument.
It keeps the headline number lower, but the bill savings it offers are a chimera. Suppliers cannot absorb infinite losses; they will eventually hedge against risk by pushing up standing charges or exiting the market. The result is a classic market distortion: a short-term fix that stores up problems for the long term.
The guide to savings is simple: insulate, switch, and monitor. But the real savings would come from allowing the market to clear properly. The price cap is a fig leaf.
The debt is the reality.
