Why are five million households now in debt to their energy supplier?
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.Tagged in: bills, debt, EDF, energy suppliers, heating, overcharging
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