Millions of consumers are now in debt to their energy suppliers, collectively owing £624 million to their providers of gas and electricity, new research has revealed.
Debt has climbed as cold winters have forced consumers to turn up their heating and the cost of energy has risen sharply. The typical household energy bill now totals £1,132 a year.
The average sum owed to energy companies is £126 per household, a decrease of 4.5 per cent compared to last year but a 10.5 per cent rise from 2008, according to price comparison site uSwitch.com.
Despite a decrease in energy debt on last year, four in ten households are struggling with larger debts than last year.
Ann Robinson, director of consumer policy at uSwitch.com, said: “Despite two years of price cuts almost two in ten households are in debt to energy suppliers – and now prices are going back up again. This is a real concern.
Advertisement
“Consumers were knocked for six by the 41 per cent,or £334, increase in energy prices in 2008 and have been struggling to find their feet ever since.
“With prices now increasing by an average of 5.9 per cent, or £63, that struggle is about to become a lot harder.”
Experts also worry that debt will stop some people from switching onto a cheaper tariffs with a different provider. Data from uSwitch.com shows that consumers can save as much as £458 by changing deals, far more than the average £126 energy debt.
“Debt is symptomatic of the high cost of energy today, added Ms Robinson. “Households will have to adapt if they are to protect themselves and there are two key steps to this - make sure you are paying the lowest possible price for your energy and cut down on the amount of energy you use.”
Nearly a quarter of those in energy debt plan to pay it off in a lump sum, while over forty per cent will increase what the pay on their monthly direct debit.
Advertisement
Just two per cent of households are considering moving onto a prepayment meter, a fall from three per cent last year.
Consumer champions have welcomed this news because paying for energy this way is more expensive.