A quarter of customers ‘are in debt to their energy supplier’

The amount of money households owe to their energy suppliers has doubled in a year to reach £1 billion, according to a report conducted by USwitch.

The much-discussed energy price rise came into effect for UK households on standard variable tariffs on 1 April. This followed Ofgem’s February announcement that the energy price cap level would be increased to £1,971 (an average of 54%) for average use dual fuel energy customers. This is its highest ever level and is a direct result of the ongoing energy market volatility that began in the autumn of 2021.

This price rise will naturally have customers concerned about the impact on their bills, which have already risen significantly in the last few months, but a recent report shows that staggering numbers of customers now owe money to their energy providers.

Uswitch research has found that in the wake of the ongoing energy crisis, the amount of money that households owe their energy supplier has doubled in the past year to £1 billion, with 23% now in debt to their supplier.

The number of households in debt to their supplier has risen by half (52%) compared to this time last year, with six million homes owing £188 on average to their energy provider. This number is over two million higher than at any point since 2018, and the average debt is 54% higher than it was in 2019.

While nearly 11 million households (38%) have a collective £1.4 billion in credit with their supplier, the overall figure is £500 million lower than in 2021, indicating that rising prices may have made it harder for people to build up a credit surplus. That said, those in credit should be better prepared for the expected price hikes in the autumn.

This means that households across the country are likely to see their direct debits rise so they can begin to pay back what is owed, making it tough to prepare for future increases.

The reality is that the situation is going to get far worse in October when we expect another price rise, so it’s important for customers to take control of their energy usage now.

How can IE Hub help?

At IE Hub we recognise the first step to money management is to understand your income and expenditure, and the only way to do this is by building a realistic budget. Our free affordability tool is designed to enable consumers to take control of their finances and create sustainable payment plans that they can manage.

Mark McElvanney, IE Hub Client Services Director, said: “The energy price rises are having a huge impact on household budgets but this isn’t the only area of concern. With the general cost of living rising many are feeling the squeeze or are being pushed into debt for the first time. Our unique approach to income and expenditure allows our clients across all sectors to engage customers and understand their affordability so the right payment arrangements or forbearance can be applied to their accounts.”

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