Fewer people in debt to energy companies

A poll for price comparison website uSwitch.com has found that almost four million households – 14 per cent of the total – are in debt to their energy supplier, down from 19 per cent last year.

But those customers who are still in debt the majority are worse off, with the average amount owed 4 per cent higher than last year – at £131 – and 15 per cent up on 2008. This reflects a 53 per cent rise in fuel bills.

Britain’s energy suppliers are now owed £478m, with a third of those in debt owing more than they did a year ago and 13 per cent less.

Worries about debt mean that 9 per cent of customers have now agreed a repayment plan with their supplier, while 3 per cent are expected to move on to a prepayment meter.

Energy UK, which represents the power suppliers, told Channel 4 News that while using a prepayment meter was pricier than direct debit, it was no more expensive than paying by cheque.

Consumers will continue to struggle to pay their bills and debt will continue to grow. Ann Robinson, uSwitch

The average household energy bill is 17 per cent higher (£183) than just over a year ago, according to uSwitch.

Channel 4 News revealed in February that there were more people in fuel poverty than ever before, despite the government’s ambitions to end it.

USwitch director of consumer policy Ann Robinson said: “With households still struggling to absorb last year’s price hikes, energy debt is on the rise again – and although suppliers have cut their prices this year, the average reduction of £41 or 3.2 per cent doesn’t come near the average increase of £224 or 21 per cent seen since the end of 2010. As a result consumers will continue to struggle to pay their bills and debt will continue to grow.”

Help

Christine McGourty, director of communications at Energy UK, said: “Energy companies recognise that the cost of gas and electricity, and a whole range of household bills, is a real concern for many people in these difficult financial times. They take their responsibilities to all their customers extremely seriously and there are a range of schemes in place to help those in particular need.

“The industry is spending around £250m this year to help two million households, and assistance is available in a variety of ways, including offers of free or subsidised insulation. Anyone with concerns about paying their energy bill should contact their supplier to find out what help may be available.”

The latest statistics from the energy regulator Ofgem, published in February, showed that in the third quarter of 2011, the number of electricity and gas customers in debt fell by 8 and 3 per cent respectively. The average level of debt was £354 for electricity and £337 for gas.

Investigation

On Wednesday, Ofgem announced an investigation into supplier E.ON to establish whether it is complying with its selling obligations. The investigation will look at E.ON’s face-to-face and telephone sales activities.

E.ON’s director of regulation and energy policy Sara Vaughan said: “We are very disappointed at Ofgem’s announcement of its investigation as we have always sought to ensure we have the best and most stringent controls in place.

” We will now work with Ofgem on their investigation and will seek to demonstrate that we have always acted in the best interests of consumers and have the right safeguards in place to ensure our principles are never compromised.”

Ofgem is continuing investigations into the sales practices of Scottish Power, SSE and npower and recently concluded an investigation into EDF Energy on the same issue.

EDF Energy agreed £4.5m for needy households as part of a settlement with the regulator after staff were found to have made misleading claims to customers.