Households face a debt “doom loop” as energy bills rise, the chief executive of Scottish Power has warned.
Keith Anderson said that debts from household gas and electricity bills will hit at least £7bn next year, forcing suppliers to recoup more costs from those who are able to pay.
This crisis will only worsen as prices rise, Mr Anderson said, with EDF warning that energy bills will jump from £1,723 today to more than £2,204 next April.
Unpaid energy debts are already adding £67 a year to the average bill under rules set by Ofgem, the regulator. However, this is poised to hit £100 if debts keep rising.
Speaking at an industry conference on Wednesday, Mr Anderson said: “Everybody thinks energy debt is headed towards £7bn, and even then there’s no end in sight.
“It’s one of the biggest challenges facing this industry, and we failed to grapple it, and we failed to get on top of it.
“Collectively, the industry has been unable to support customers, so we’re reaching a point now where that debt burden is neither fair to those who are paying, and it’s not sustainable for the companies carrying it.
“If we’re serious about affordability in the long term, we have to be serious about tackling that debt issue.
“We’re heading into a doom loop of asking today’s bill-payers to pick up the costs of others without solving any of the issues that caused it.”
Similar concerns have also been raised in the water sector, where debts could hit £3bn by next year, according to James Cooper from energy consultancy Baringa.
He said: “We could realistically be talking about £10bn of household debt in utilities within 18 months, which is a frightening figure.
“At that sort of level for energy, we will be looking at just shy of £100 for the average bill of paying households to cover the cost of that debt.”
Debts in the energy industry have largely been blamed on rising bills, which have been driven up by green levies and fallout from the Iran war.
Wholesale gas prices hit their highest levels since 2022 on Wednesday at 217p per therm, up from just 81p a year ago.
This has increased pressure on Miatta Fahnbulleh, the Energy Secretary, to approve the UK’s Jackdaw and Rosebank oil and gas fields, which could boost energy output by up to 10pc.
She said on Wednesday that a decision on whether to give Jackdaw the green light was “imminent”.
An announcement is expected as early as next week but a decision on Rosebank, the largest untapped oil field in UK waters, will take “a bit longer”, she said.
She also stressed that the UK was not at risk of blackouts this winter.
“I’m 100pc confident that [the lights] won’t go out this winter,” she said. “The first duty of the Secretary of State is to make sure that we can deliver security supply.
“So that is the first question I’ve asked of the system, and we tested it and we kicked it round, and I am 100pc confident. We haven’t had an outage or problems [nationally] with security supply for coming on for 20 years.”
