Consumers in debt to energy suppliers by £637 million
The number of households in debt to energy suppliers has rocketed by over a million in a year, according to research from uSwitch.com. Over five million households (20%) are now believed to owe their energy supplier money, compared to under four million (14%) last year. Collectively, consumers now owe an estimated £637 million - £159 million more than last year.
One in four of those in debt (41%) owe more than they did a year ago, while just 9% owe less. And, while the average amount owed to suppliers has fallen by £8 to £123 following price cuts early last year, this winter's price hikes coupled with the coldest March on record could see the average energy debt shooting back up again.
More tellingly, the average household energy bill now stands at an eye-watering £1,353 a year - almost £100 more than a year ago and £831 more than at the start of 2004, putting unprecedented pressure on household budgets.
Just over two in ten (22%) of those in debt to their supplier are turning a blind eye to it in the hope that the amount they owe will go down naturally over time. However, the same number again, (22%) intend to pay it off with a lump sum, while almost half (45%) plan to increase their regular direct debit payment.
Worry over mounting debt is leading almost one in ten (8%) to agree a repayment plan with their supplier, while 2% expect to go so far as to move onto a prepayment meter. This is a cause for concern as prepayment meters are a more expensive way to pay for energy.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "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.
"The important thing for households is to try to keep a lid on energy costs. There are two simple ways to do this - use less energy by making our homes more energy efficient, perhaps by taking advantage of the Green Deal, and paying less for the energy we do use by switching to the most competitive tariff for our needs.
"Paying energy bills by direct debit will also help to cut the cost as suppliers offer valuable discounts for paying this way. It also spreads the cost of energy use evenly throughout the year, so that households can avoid the burden of heavy winter bills. Consumers should also make sure that they or their supplier are taking regular meter readings, as relying on estimated bills can be a shortcut to debt. The important thing is that anyone who is concerned about managing their energy bills or their ability to pay should contact their supplier sooner rather than later to discuss their options."