Gas giants owe bill payers £486 million "cash on float"

The UK's energy bill payers who fail to proactively monitor their energy usage and billing fall into two distinct camps, but share common ground in their apathy, says MoneySupermarket.

The comparison site analysed household gas bills to reveal the number of customers who are in debt to their gas supplier and the number in credit, to reveal overall the UK's gas suppliers have built up a £486 million "cash float".

Energy bill debt trap

The research found 1.4 million households are in debt to their gas supplier - with each bill payer owing on average £128, meaning a total current debt of £179 million.  MoneySupermarket previously analysed customers in credit or debt to their energy provider in February this year.

Confidence in the ability to repay that debt has declined since February, indicating a worsening in the state of the nation's finances. In February, 12 per cent of those who owed their energy supplier money say they were intending to pay off the debt straight away. But by October this had declined to just five per cent.

Over one in ten (12 per cent) of those in debt stated in October they now can't afford to pay back their debt. Furthermore, a quarter of those in debt to their gas supplier think the money owed means it will be difficult to move provider and this debt would be harder to pay off.

Damp squib summer + increased energy usage = perfect storm for energy bills

The summer months are traditionally a time when energy usage reduces, but this was muted this year with half of households (47 per cent) believing they used more energy this summer due to wet weather compared to previous summers. One in five (20 per cent) used the heating as they felt cold, and almost a fifth of households (17 per cent) used more energy as they spent more time indoors this summer than others. As a result over a third (36 per cent) of adults are worried they won't be able to pay their energy bills this winter.

Clare Francis consumer finance expert at MoneySupermarket said: "It is concerning how many people whose energy account is currently in debt, feel unable to pay off what they owe - especially as price rises are kicking in. Those in the red are likely to find it difficult to change supplier until the debt is cleared, thereby limiting their chances of finding the very best deal available to them. As we head to winter, our energy usage will increase,  which is likely to result in a higher number of people owing money to their energy provider and there are serious concerns that for some their debts will spiral out of control.

"The simplest ways to avoid going into debt with your energy supplier is to pay by monthly direct debit and provide regular meter readings. That way you can ensure that the amount you are paying each month reflects your actual usage not your estimated usage as the energy firm will amend. You don't have to wait for someone to come to your house to record the meter readings - you can do it yourself and then submit them to your gas and electricity provider either online or over the phone."

Customers in credit

However, over six million households are in credit to their gas supplier and are owed on average £104, in total UK consumers are £665 million in credit. Energy suppliers are therefore sitting on a staggering £486 million of "cash on float" overall, a figure which could equate to an additional £12 million interest customers are collectively missing out on, if the credit was sat in an interest earning account, and not with their energy supplier.

Clare Francis continued: "Energy customers have been dealt a raw deal with five of the ‘Big Six' announcing price rises over the last few months, so we expect the balance between those in credit and those in debt to switch significantly towards more households being pushed into the red."

"Following the abysmal weather of this summer many people resorted to using more energy than usual, and coupled with the recent price rises means a perfect storm has been created with consumers feeling the effects of staggering bills even harder to bear than ever at this costly time of year. Those who are in credit can of course get their money back, but may want to hang on to the cash in some form, whether in a savings account or with the supplier, as a back-up until after winter bills have landed, and then see what their energy usage situation is."