Consumers head into winter £292 million in debt to energy suppliers
Almost 2.5 million households are in debt to their energy supplier at the start of winter
Households collectively owe energy providers £292 million or an average of £120 each, at a point in the year when they should be in credit
40% of those in debt are increasing their monthly payments to pay off their debts while 18% are choosing to turn a blind eye
Suppliers including Co-Operative Energy, GB Energy and Ecotricity have hiked prices in reaction to rising wholesale energy costs, adding pressure on households
Uswitch.com urges customers with mounting debts to speak to their energy provider for help managing payments.
Almost 2.5 million homes are heading into winter already owing energy suppliers a staggering £292 million, according to new data from Uswitch.com, the independent price comparison and switching site.
The research reveals that the average debt per household is £120, at a point in the year when consumers should be in credit in preparation for the cold months ahead at the start of winter. Recent Ofgem figures indicate that 70% of annual household gas and 54% of household electricity use occurs between October and March so, with households using more energy to keep homes warm in the coming months, millions could find themselves falling even further into debt.
Not only is winter fast approaching but wholesale prices – which make up around half of energy bills – continue to rise due to the low value of the pound pushing up the cost of energy imports, future supply concerns and higher transmission prices. This has already led to some energy suppliers, in particular small and medium suppliers including Co-operative Energy, GB Energy and Ecotricity, to raise prices.
For customers already in the red with their supplier, any price rises will put even more pressure on households this winter. According to today’s figures, the majority of those in debt (40%) are having to increase their monthly Direct Debit payments, with a further 16% paying everything off in one lump sum. Worryingly, a fifth (18%) of consumers are choosing to turn a blind eye to the amount they owe in the hope it will go down over time.
Consumers concerned about debts should first speak with their energy supplier, who can provide advice on managing energy use and help devise a plan to make payments more manageable. There is also extra help for vulnerable consumers, including the Warm Home Discount which offers a £140 electricity rebate for eligible customers.
One of the easiest ways to cut bills and help prevent large debt is by switching to a better energy tariff. Over 65% of households languish on some of the most expensive deals on the market, despite the fact that switching could save an average of £403 a year.
Claire Osborne, Uswitch.com energy expert, says: “These new figures show how unaffordable energy is for hard-pressed consumers. Winter has barely begun, yet millions of households already owe significant sums to suppliers. Once the cold weather really starts to bite, some consumers will inevitably find themselves in further financial difficulties.
“If you are in debt, ignoring it won’t make it go away. Your first port of call should be speaking to your energy supplier to discuss the problem and work out ways to help resolve it. You should also check if you’re eligible for schemes like the Warm Home Discount, which is available for some vulnerable consumers. If debt levels get out of control and you feel you have nowhere left to turn, you can also talk to organisations and charities like Citizens Advice and StepChange for confidential support.
“You can also consider switching your energy provider and move to a more competitive tariff. With wholesale energy prices continuing to rise, more energy suppliers could hike prices in the coming months. But competitive deals, often offering savings in the hundreds of pounds, are still available – with fixed deals offering protection against price rises. With other economic uncertainties threatening to squeeze household finances, it’s more important than ever to keep in control of energy spending and avoid unnecessarily paying over the odds.”
FOR MORE INFORMATION
Jason Wakeford
Phone: 0203 872 5612
Email: jason.wakeford@uswitch.com
Twitter: @UswitchPR
Notes to editors
When asked ‘Thinking about your most recent energy bill from your supplier, which of the following best applies to you? 9% of respondents responsible for paying energy bills, either individually or jointly with someone else referred to ‘in debt/arrears’. 27 million households in the UK. 9% of 27 million = 2,430,000. The mean amount of those in debt was £120. £120 x 2,430,000 = £292 million.
When asked ‘Thinking about the amount you are in debt/arrears with your energy supplier, how are you going to pay it off? 40% said they will increase their monthly direct debit payments, 18% said they are hoping it will go down naturally over time and 16% said they will pay it off in one lump sum
https://www.ofgem.gov.uk/publications-and-updates/infographic-energy-security
https://www.uswitch.com/media-centre/2016/10/gb-energy-raises-prices-by-30/
Source: CMA, summer 2016
Between 1 March 2016 and 31 May 2016, people who switched energy supplier for both gas & electricity with Uswitch saved an average of £403.
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