ScottishPower has asked UK energy regulator Ofgem to ringfence part of household energy debt and refinance it through banks, separating balances the company said are not realistically affordable to repay from other arrears.
The supplier said households it classifies as unable to repay account for about one-third of outstanding sector debt. It proposed pooling that portion into a longer-term financing structure, with repayment spread over about 10 years rather than recovered more quickly through near-term tariffs. ScottishPower said its analysis indicated the annualised impact could be kept below £10 per household per year.
The company said suppliers should be required to show they had taken appropriate steps to collect unpaid bills and that the ringfenced balances would be limited to cases where repayment is not realistically affordable.
Ofgem’s latest debt and arrears indicators showed combined domestic debt and arrears of £4.79 billion at the end of the first quarter of 2026, up from £4.55 billion in the fourth quarter of 2025. Ofgem defines debt as balances on a formal repayment arrangement and arrears as balances without one, with the reported stock covering amounts more than 91 days old. Separately, Ofgem said on May 27 that the energy price cap for a typical dual-fuel household paying by direct debit will rise 13% for the July 1 to September 30, 2026 period.