ENERGY debt relief should be funded from excess profits instead of billing struggling households, campaigners warned today.

The call came after energy regulator Ofgem announced that £500 million of energy bill debts are to be paid off through another bill hike.

Households are set to face a £5 increase in their annual energy costs in 2027-28, to cover suppliers for unpaid bills. 

This adds to £52 which is already added annually to cover written off energy debts.

Britain’s energy debt has already spiralled to £4.4 billion amid surging costs.

Energy giants have meanwhile pocketed £500bn in profits over the last five years.

Ofgem’s debt relief scheme is expected to help around 195,000 people.

Its first phase will launch next year and focus on those who receive means-tested benefits and more than £100 of debt.

End Fuel Poverty Coalition coordinator Simon Francis noted that Ofgem had revealed the plans before publishing its official consultation on the matter – raising questions about whether it had been “bounced into action” by a report from the energy select committee this week.

“In this report, MPs got it right: this energy debt crisis needs bolder, faster action and must be funded through excess energy industry profits, not pushed back onto struggling households,” he said.

The average debt for people without a repayment plan currently stands at about £1,716 per household.

Eva Watkinson, head of campaigns at charity Debt Justice, called for the scheme to be “expanded immediately.”

“This scheme will bring much needed relief for thousands of people receiving benefits,” she said.

“But millions more are being crushed under the weight of unjust and unpayable energy debt caused by the cost-of-living crisis. 

“It is outrageous that energy network companies, which have made enormous profits, are not contributing to the cost of the debt write-off scheme.”

Charlotte Friel, director for retail pricing and systems at Ofgem, said: “We know the growing amount of debt in the energy system is a significant challenge.

“We must protect consumers by striking the right balance between making sure those that can pay are supported to do so, and targeting support at those who need it most.”