Why are five million households now in debt to their energy supplier?

Simon Read

image3 e1365499152591 300x224 Why are five million households now in debt to their energy supplier?More than five million households are now in the red to their energy supplier, owing an estimated £637m, shock new figures published today reveal.

The number has soared by more than a million in the last year while average bills have climbed almost £100 to £1,353.

That’s maybe partly because a quarter of households has been incorrectly billed by their energy supplier, often leading them to receive a sudden shock demand for the back underpayments.

But it’s also because people in debt often tend to ignore bills in the misguided hope they will simply go away.

The good news is that energy firms are no longer allowed to cut off supply to people in payment arrears. However they may try and persuade hard-up folk to switch to pre-payment meters – a move that will end up costing householders more.

According to research from uSwitch, two-fifths of households – 41 per cent – owe more than they did a year ago, while only one in 10 – 9 per cent – actually owes less.

Dealing with the growing debt is proving to be a problem for many with just over two in ten – 22 per cent – of those in debt to their supplier turning a blind eye to it in the hope that the amount they owe will go down naturally over time.

Worryingly some people expect to move onto a prepayment meter in order to get control of their debts. While the figure is just 2 per cent, according to the research, those that do switch will end up being charged more for their energy.

Ann Robinson, director of consumer policy at uSwitch said: “The soaring number of households in debt to energy suppliers is a clear indication of the pressure people are coming under just to meet the cost of their basic bills.

“The fact that a million more households have fallen behind in the last year so that over five million are now in debt to suppliers tells us everything we need to know about the impact of sky-high energy prices.”

She said the important thing for households is to try to cut energy costs, either by using less energy by making homes more energy efficient.

The news follows figures published last week by a group representing debt management firms that 2.1m people are behind on their water bill – making water arrears the most common utility debt. Research by the Debt Advisory Service suggested that 42 per cent of those who have fallen behind have been in arrears for more than three months, suggesting the problem isn’t a temporary one.

“Anyone who is concerned about managing their bills or their ability to pay should contact their supplier sooner rather than later to discuss their options,” Ms Robinson advised.

Energy firms must, too, do their bit and help people in arrears – not just switch them to a more expensive way of paying.

You can do more for yourself by switching to a cheaper deal if you haven’t done so recently. For instance EDF today becomes the latest to introduce a new fixed price energy plan. The Blue + Price Promise February 2015 protects against price hikes for the next two winters but comes without an exit penalty, allowing you to move on if energy prices suddenly tumble.

But if you’re fed up with the big six there are a number of alternative energy suppliers to whom you could switch. These include Co-operative Energy, First Utility and Ovo Energy as well as green suppliers Ecotricity and Good Energy.

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  • welshwitch

    This is because the so-called competing energy companies are in reality a rapacious cartel, much of it owned by overseas companies, though the British-owned ones are no better, and because there is no effective regulation of their costs or their claims over pricing/bills, which it’s impossible to challenge since they swathe in in incomprehensible jargon and convoluted systems. Not to mention that fact that they claim, sweetly, if you protest, that you meter may be faulty and offer to check it for a mere £80+, though as they say, meters are almost never inaccurate. Yeah, right.

  • SH

    “if you aren’t done so recently” can i believe my eyes? the poor quality of the English in the rest of the article is blown away by this.

  • Rona Hunnisett

    Don’t switch to First Utility whatever you do – we registered for gas and electricity with them EIGHT MONTHS ago. The electricity switched, the gas didn’t, and their customer services are beyond dim and utterly incompetent…not helped by the fact that they clock off ON THE DOT of 5pm. Utterly utterly useless – we have meanwhile been paying 20% more than the promised tariff during the coldest winter on record and all we get back are vacuous “we’re dealing with it” messages. The electricity tariff depends on gas switching too – how long before they start trying to rip us off even more. Very very very unhappy with the whole thing.

  • why_me

    Tell Sid that British Gas shares are now worth a packet :-) thx mrsT :-/

  • FayeCorgasm

    I would also suggest the practice of only having to read a meter once every two years is partly to blame. After being caught out by this a few years ago we now do a meter reading every 3 months and submit this to our supplier.

  • delilah1

    My contract with my energy supplier is an ‘online’ tariff which requires me to submit meter reading every three months. They send an email when they want a reading and allow 7 days for me to do it. We were away once and they estimated it BUT sent an email saying they would adjust if I wanted to send accurate readings on my return.Nice one!
    Only once did I have to phone them and what a disaster that was…all the staff I spoke to weren’t English and had a poor understanding of the language. Eventually I demanded they log my call as a complaint which produced a reply from a charming English Manager.
    Fingers crossed I have no further problems.

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