Energy debt

Energy debt

Getting into energy debt can be extremely worrying, but there is help out there.

Hundreds of thousands of people across the UK are struggling to pay for their energy, a fact being made worse and worse by the ever-increasing costs of energy. However, falling behind on your energy payments needn't lead to your power being switched off.

Dealing with energy debt involves a number of important steps, and the first one is to stop overpaying for your energy. Millions of households across the UK are stuck on out-dated tariffs from expensive suppliers who are making a fortune off them. Many people believe that switching energy supplier if you're in debt to your current supplier is impossible, but this simply isn't the case.

If you owe less than £500 and you're on a prepayment meter you can switch to a cheaper deal (this was recently upped from the previous limit of £200 in September 2012). If you owe more than £500, you will not be able to switch until you pay down your debt.

If you're on a standard meter and you're in debt to your supplier, you may be able to switch. Ofgem is working with suppliers to minimise the number of switches blocked due to debt. Download our free energy debt factsheet at the bottom of the page for more information.

Energy debt - What to do

If you're in energy debt, or you're finding it tough to keep up with your gas and electricity bills, then your first port of call should always be your energy supplier. Believe it or not, even though they are the ones causing your financial distress they are also the most likely source of help.

Call them or write to them to discuss the situation and find out what they can do to help you. Your supplier must also give you information on how to avoid getting into debt, about how you can pay back your debt, a list of the money you currently owe.

Energy debt

As well as giving you tips on ways to avoid getting into energy debt in the first place, your energy supplier can set up a repayment plan so you can pay back your energy debt gradually. Although they are not required by law to offer you a way of repaying your debts that takes your financial situation into account, they are likely to.

Repayment plans space your energy payments out over time so you don't have to pay large lump-sums all at once. They can be weekly, fortnightly or monthly, and will include a portion of your current use and a portion of your debt.

If you are already on a repayment plan, but can't manage the payments, you may be able to renegotiate with your supplier so that it is more affordable.

Prepayment meters

If you're facing the prospect of being disconnected, your energy supplier may suggest that you switch to a prepayment meter, which will ensure you don't fall further behind in debt to them.

A prepayment meter allows you to pay off your energy debt at the same time as you pay for the gas and electricity you use.

You prepay for your energy with a token, key or smartcard that you 'top-up' like a pay as you go mobile phone.

However, if the money you top-up your prepayment meter with runs out, you will not be able to get gas or electricity. To make things worse prepayment meters can often be more expensive than a standard meter.

On the other hand, a prepayment meter puts you in control of exactly how much you spend on your gas and electricity, and is likely to change your energy habits around the home, whether it be turning the lights out in every room or switching to energy-saving lightbulbs. Find out more about prepayment meters .

Social energy tariffs and Warm Home Discount

All energy suppliers offer something called 'social energy tariffs'. These tariffs offer discounted energy bills to customers who are elderly, live in fuel poverty, are on benefits or have a very low income. Find out more about social energy tariffs .

From 2011 onwards Social Energy Tariffs will gradually be replaced by the Warm Home Discount. To learn more you can read our dedicated Warm Home Discount to learn more, or call the dedicated Warm Home Discount helpline on 0845 603 9439 from 9am to 5pm on Monday to Friday.

Deductions from your benefit payments

Some people on benefits can arrange to pay off their energy debt by way of small weekly deductions from their benefit payments, known as third party deductions.

You can get more information from the Citizen's Advice Bureau and Job Centre Plus .

Disconnection - the worst case scenario

It's rare for people to have their gas and electricity disconnected, because it really is a last resort for energy suppliers, but it can happen and is never nice when it does.

Your supplier has to send you a disconnection notice before they can disconnect you, and they can't send this until at least 28 days after they send your bill. They also have to give you at least seven days written notice first.

If you are a pensioner, have long-term health problems, are disabled or have serious financial problems, there are extra measures in place to protect you against being disconnected.

Look at the bigger picture

If energy debt isn't the only kind of debt you are struggling with, you may want to think about getting assistance with your wider financial problems.

Our debt help centre has tools, guides and articles to give you a better understanding of your situation, and can identify debt help options that are right for you.

The key to dealing with debt is to make a plan so you can tackle your financial problems step by step. This often involves setting up a tiered system of repayments with your creditors.

Free factsheets to download

Keeping on top of your energy bills factsheet Energy switching factsheet

Read more…

Get the cheapest energy deal