Scottish Power has written to energy regulator Ofgem proposing a securitisation scheme for unpaid household energy bills that have reached £4.8bn across the UK. The Iberdrola-owned utility argues that packaging these bad debts into tradable securities could provide a more sustainable solution than current industry practices.

Household energy debt has swollen dramatically, with the average consumer facing an extra £50 annually on their energy bills to cover unpaid amounts. This burden falls disproportionately on responsible customers who effectively subsidize those unable or unwilling to pay their utility bills.

Securitisation would allow energy companies to transfer these debts to investors, potentially recovering some value while removing toxic assets from their balance sheets. The proposal represents a significant shift in how the industry handles customer defaults, which traditionally get written off at substantial cost.

If adopted, this approach could reshape UK energy market dynamics and establish a precedent for handling consumer credit risk across utilities. The plan deserves serious consideration given the mounting debt pressures facing the sector.