Customers owe £464m to energy suppliers
Four million homes in the UK are in debt to their energy supplier and the average amount owed has risen following winter price hikes
A third of those in debt said they owed more money now than they did 12 months ago. In fact, the average debt per household rose by £5 to £128, following the spate of energy price rises which took place over the past winter.
The news comes at a time when the average annual energy bill costs £1,265*, a full £53 more than last year. This represents an increase of 168% since 2004. Despite these figures many consumers have yet to switch to a better deal.
Huge savings to be made by switching
According energy regulator Ofgem, 62% of Brits have never switched to a cheaper energy deal. A further 45% do not feel they could save much money by changing supplier. However, with a difference of more than £300 between the cheapest and most expensive energy tariffs, consumers would be advised to run a price comparison and see how much they stand to save.
At present, both First Utility and Ovo Energy are offering sub-£1,000 energy deals, the cheapest the market has seen in the past two years.
‘Clear indication of the extreme pressure families are under’
Director of Consumer Policy at uSwitch, Ann Robinson, said: “Millions of households are in debt to energy suppliers and the amount they each owe has risen. This is a clear indication of the extreme pressure families are under to meet the rising cost of energy.
“The average household energy bill is £53 a year dearer than a year ago. For many consumers, the only thing that has kept this particular wolf from the door is the fact that this winter has been exceptionally mild.”
Energy debt is ‘catch-22’
“Those in energy debt can face a catch-22. Despite knowing they could reduce their bills by moving to a cheaper energy plan, many see debt as a barrier to switching.
“With a difference of over £300 between the cheapest and most expensive tariff on the market, consumers cannot afford to have this avenue closed to them. This is why it’s so important to provide regular meter readings to suppliers as relying on estimated bills can be a shortcut to debt.”
Robinson: Pay your bills by direct debit
Robinson advised consumers to pay their energy bills by direct debit. This payment method ensures energy costs are spread evenly throughout the year and saves homes the burden of paying huge bills around winter time. Customers who pay by direct debit also benefit from a discount.
She also had some words of advice for those struggling to pay bills: “Anyone who has got to the stage where they are concerned about their ability to pay should contact their supplier sooner rather than later to discuss their options.”
* Based on a medium usage customer using 3,200 kWh of electricity and 13,500 kWh of gas paying by direct debit with bill sizes averaged across all regions.