- Energy debt has risen £75 million (24%) from last year
- Three million households now owe a collective £400 million to their supplier – at a time when they should be in credit
- Over one in ten bill payers (11%) are in debt by an average of £134 each
- The number of households owing money has increased by over 300,000 (12%) since autumn 2017
- Two in five (41%) are already worrying about their energy bills ahead of winter
- uSwitch.com urges consumers to tackle debt head on before the temperatures plummet by setting up a repayment plan or switching to save up to £482.
Despite one of the hottest summers on record and a blissfully balmy September, household energy debt has soared by a quarter (24%) compared to this time last year. Three million households collectively owe nearly £400 million to their energy supplier at the start of autumn, according to new research from uSwitch.com, the price comparison and switching service.
At a time when they would expect to be in credit, more than one in ten energy bill payers (11%) are actually in arrears, having ended the summer owing their supplier an average of £134 each.
Compared with this time last year, the number of households in debt has increased by over 300,000 (12%) and the total debt owed has risen by a whopping £75 million. Looking further back, consumers owe over £100m (36%) more to their energy company than they did in 2016.
The higher levels of debt in 2018 follow an unprecedented number of price hikes from large and small suppliers due to rising wholesale costs. Since January, a total of 32 energy providers have announced 55 price rises, adding nearly £900 million a year to domestic energy bills. With over a third (36%) of bill payers thinking they used less energy this summer than in 2017, it’s looking like the rises are taking their toll.
Two in five (41%) consumers – equivalent to over 11 million households – say they’re worried about how they will afford to pay for gas and electricity over winter. When asked how they plan to pay off their debt, over a third (34%) intend to increase their monthly direct debit, while a fifth (20%) are aiming to clear their balance in one lump sum.
15% of consumers in debt plan to agree a repayment plan with their supplier. However, over a fifth (21%) are either hoping that the amount will go down naturally over time or do not know how they are going to pay the debt off. Most concerningly, 3% don’t think they can afford to pay back what they owe.
uSwitch advises anyone worried about their debt to speak with their energy supplier, who can help set up a repayment plan, provide energy saving advice and sometimes provide free insulation or grants to help keep costs down.
Switching supplier can be an effective way to spend less on energy bills and can save households up to £482 a year. Credit meter customers need to pay off any debt before they move energy company unless it is less than 28 days old, in which case it will be added to the final bill. If the level of debt is too high to pay off in one go, consumers should speak to their supplier and ask to be put on the cheapest deal they offer, which will help bring energy costs down.
Prepayment meter customers in debt to their supplier by less than £500 per fuel are usually able to switch energy company, but are still advised to organise a manageable repayment plan. Debt charities such as StepChange are on hand to provide advice and guidance for people experiencing financial difficulties. There is also extra help available for vulnerable consumers through schemes such as the Winter Fuel Payment, Cold Weather Payment, and the Warm Home Discount.
Rik Smith, energy expert at uSwitch.com, says: “The soaring number of households in debt to their energy supplier is a clear indication of the pressure people are under just to make ends meet.
“With winter just around the corner, it’s important that households use this time to tackle rising bills. After so many price rises this year a lot of people may have received a price rise notification over the summer but not switched to a cheaper deal. Now is the time for consumers to take action, by making their homes more energy efficient or ensuring they don’t pay any more than they need to for the energy they use.
“For anyone struggling with their energy bills and worrying about keeping warm, there is help available. They should speak to their supplier as soon as possible about repayment plans and other assistance on offer, and find out if they’re eligible for Government support with energy bills.
“Households across the country, whether in credit or in debt, should check whether they could pay less for their gas and electricity. In just ten minutes people could reduce their energy bills by up to £482 a year – much more than the Government’s planned price cap can deliver.”