Around five million households are currently in debt with their energy providers, says leading Trust Deed provider Trust-deed-scotland.co.uk.
A study of 2000 people by the energy comparison site uSwitch shows consumers in the UK owe around £637 million to their energy providers, which has increased by around 6% since the same time last year. One in five survey respondents said they owed a debt to an energy supplier.
Interestingly, the average amount owed to suppliers has dropped by 6.5% or £8 compared to last year, due in part to price cuts but also the unseasonably warm weather last March and April. However, the average yearly energy bill still stands at £1,400.
Ann Robinson, director of consumer policy at uSwitch, said: “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.”
Despite knowing they needed to clear their bill arrears, 20% of those in debt claimed to be “turning a blind eye’ in the hope the lower summer bills would mean the debt would decrease over time. A further 20% intend to pay off the arrears with a lump sum and 45% by increasing their direct debits.
Among the many energy saving tips uSwitch recommend to keep energy bills under control, paying by direct debit and taking regular meter readings are two which can help households make the most of their energy usage. In addition, making their homes more energy efficient through incentives such as the Green Deal could also be an important part of saving money.
A spokesperson for Trust Deed Provider, Trust-deed-scotland.co.uk said: “It’s been one very long winter and this is reflected in how much people owe to their energy providers. By now people would be turning down their thermostats and putting away their winter clothes, but the prolonged snow has meant heating systems have stayed turned up for at least six weeks past when they normally would. This time last year we had been basking in our gardens in a heat wave – now we’re shivering in our homes in furry slippers and jumpers.”
However, recent reports of mis-selling by energy companies has shown that the most energy conscious households could still be at risk of paying more than they should be. Ofgem recently fined the country’s largest energy company SSE for “prolonged and extensive” mis-selling after it found “failures at every stage of the sales process.”
“Despite taking every precaution to get a better deal, the actions of SSE show that sometimes the energy suppliers will put profits ahead of people,” said Trust Deed Scotland's spokesperson. “Ofgem found that SSE had made misleading statements and supplied misleading and inaccurate information, including making people believe they would save money when they knew they wouldn’t. Instead of having lower bills, some customers that switched were put onto even more expensive contracts by salesman wanting to hit their targets.”
“With that kind of blatant mis-selling, it’s no surprise that people end up in debt.”