Thursday 10 March 2011

Families are struggling to pay to pay energy bills due to rises in cost of heating


Consumers are in debt to utility companies to the tune of £624m, thanks to two successive freezing winters and recent spiralling energy costs.
Householders owe an average of £126, according to research by  most of comparison websites . This is 4.5% lower than last year's figure, but 10.5% more than in 2008 when the average amount owed was £114.
Although households benefited from energy price cuts in 2009 and 2010, nearly four in ten (38%) say they're more in debt today compared to last year, and just 14% say they owe less than last year.

And as suppliers have increased their prices by an average of 5.9% or £63 in the past few months, taking the typical household energy bill to £1,132 a year, and the price of crude oil is continuing to soar,, energy debt is likely to rise again. The fact that bills today are 38% or £313 higher than in 2008 makes this even more certain, uSwitch says.
Nearly a quarter of households in debt (23%) intend to pay their arrears off as a lump sum, while more than four in 10 (42%) plan to increase their direct debit, paying off the arrears on a monthly or quarterly basis. However, nearly a quarter (22%) say they don't plan to do anything to reduce their debt, hoping it will go down naturally over time.
For some consumers, concern over their debt is getting too much, with one in ten (10%) considering agreeing a repayment plan with their supplier, a 2% increase on last year. Just 2% of those in debt to suppliers are thinking of moving onto a more expensive prepayment meter (PPM), 3% less than last year.

Ann Robinson, director of consumer policy at uSwitch.com, said: "Energy debt can be a catch-22. Despite knowing they could reduce their bills by moving to a cheaper energy plan, consumers can see debt as a barrier to switching. However, our research shows that while the average debt is £126, consumers could save up to £458 by switching. So while they may have to pay any outstanding debt to switch, by cutting the cost of their energy they could avoid falling back in to debt in the future."
Audrey Gallacher, head of energy at Consumer Focus, said: "These are worrying figures. High energy prices and a cold winter have clearly hit customers hard, leaving many households struggling to afford their bills.
"If people are falling into debt we would urge them to contact their supplier as soon as possible for help on repaying any debt and cutting their energy use. Energy companies must play fair by customers and set repayments at a level that people can afford, but people also need to have confidence that the price they're being asked to pay is fair."
Customers who are struggling to pay their bills should always contact their supplier and ask what free energy efficiency measures they might be entitled to and set any debt repayments at an affordable rate.

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