Brits £820million in debt to gas and electricity suppliers

10 March 2009 / by Rachel Mason
Six and a half million households owe money to their energy supplier – a total debt of nearly £820million, according to the latest research by uSwitch.com.

The price comparison site has found that a quarter of all UK households – 6.5million in total – owe £126 on average to their energy supplier, a total of £820million.

uSwitch.com's research has also revealed that 52 per cent of households say they now owe more to their gas and electricity suppliers than they did in 2008, and overall, UK homes owe 11 per cent more than they did last year.

According to uSwitch.com, although 2008 saw energy price hikes of 42 per cent, or £381 on average, many customers have only just started to see these increases reflected in their monthly direct debit payments.

Almost three quarters of UK households pay for their energy bills by direct debit, but 30 per have only just had their direct debit increased in the past three months, which means many customers are now "playing catch up" to make up for months of underpaying.

This delay is because gas and electricity providers have to review accounts before amending direct debits - they cannot increase direct debits automatically because not everyone will need their monthly payments to go up.

"Despite energy prices now starting to fall, almost a third of direct debit households have only started to feel the impact of last year’s price hikes within the last few months," says Ann Robinson, director of consumer policy at uSwitch.com.

"Not only has this raised concerns over affordability, but it also suggests that energy debt is likely to continue to grow as so many households will be playing catch up," she said.

Ms Robinson continued: "the danger is that consumers will cancel their direct debit because they cannot afford the increases, but will then end up paying more for their energy because they will lose valuable direct debit discounts."

She says that owing money to an energy supplier can also prevent people from being able to reduce energy bills by moving to a cheaper deal, and urges consumers to start taking a more active role in managing their energy bills.

"If you are going into the red and can afford to increase your payments, contact your supplier," she advises.

"Make sure you are paying the lowest possible price for your energy by shopping around, cut down on the amount of energy you use and make sure you or your supplier is taking regular meter readings. Relying on estimated bills can be a shortcut to debt."

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