Energy debt hits £728 million

Energy debt hits £728 million

Although around 1 million less households are in energy debt than last year, the average amount owed is now £132 - which is 5% higher than last year, and 17% higher than 2008.

The survey found that a quarter of the households who were in debt intended to pay it off by lump sum, while four in ten were planning to increase their direct debit.

Some 8% of those polled were looking at negotiating a repayment plan with their supplier and, more worryingly, 5% were considering moving onto a prepayment meter, despite the fact that they can be far more expensive than paying for your energy by direct debit.

Ann Robinson, Director of Consumer Policy at uSwitch, suggested that 2008's energy price rises had had an impact on energy debt: "The impact of the 42% or £381 hike in energy prices in 2008 cannot be underestimated - consumers are still feeling the pain and subsequent price cuts have done little to ease this.

"The fact remains that consumers have been left facing bills that are £315 or 26% higher than at the beginning of 2008."

The impact of the recession and the cold winter are also thought to have played a role in pushing up energy debt, and with recent price cuts from 5 of the 'Big 6' energy suppliers, there are increasing calls for other suppliers to cut their prices.

Ann Robinson added: "Energy debt can be a catch-22.

"Despite knowing they could reduce their bills by moving to a lower cost energy plan, consumers may perceive debt to be a barrier to switching.

"In fact Ofgem has worked with suppliers to minimise the number of switches blocked due to debt."

She advised that if people were concerned about getting into energy debt, they should make sure that they are paying the lowest possible price for their energy and also cut down on the amount of energy they use, as well taking regular meter readings to avoid inaccurate bills.

Get more information on energy debt and the help available for people who owe money to their energy supplier.