Energy debt doubles to £1bn in just a year
Six million households owe an average of £188 to their energy provider, with the numbers in debt on this utility up 52% compared to this time last year.
Research from comparison site Uswitch revealed the amount of households in debt is more than two million higher than at any point in the last four years. As such, the average debt is up 54% compared to 2019.
The average amount owed is £58 more than this time last year.
However, nearly 11 million people have built up a collective £1.4bn credit balance which should alleviate some of the cost pressures facing households this autumn when the energy price cap is expected to be hiked again.
But Uswitch said this figure is £500m lower than last year, suggesting that rising prices have made it harder for billpayers to build up an energy price buffer.
Nearly two in five households (38%) are in credit with their supplier, a decrease of almost a fifth (18%) compared to last year.
The average amount of credit is £135, but more than one million customers have over £300 credit with their supplier.
Uswitch revealed Octopus Energy has the largest proportion of customers in debt, with a third in this situation. OVO has the most customers in credit (50%), while EDF has the highest proportion of customers with neither debt or credit (39%).
The table below reveals the percentage of customers in debt or credit with the largest energy suppliers:
The comparison site found that customers are changing their usual approach to credit balances. Rather than asking their supplier for their credit balance to be returned, two thirds plan to leave the money with their supplier to try to reduce their monthly bills. Only one in ten (10%) intend to ask their supplier to return some of their money.
For four in five, they’ve attempted to cut down their energy use amid soaring prices, with two fifths (39%) turning down the thermostat, a third only using the heating on days it felt particularly cold, while 15% said they had turned off their heating entirely.
‘Situation will be worse in October’
Justina Miltienyte, energy policy expert at Uswitch, said: “Higher prices over the winter has meant we are seeing many more people in energy debt at a time when they should be building up their credit again.
“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 to take control of your energy use now.
“If you do not have a smart meter, record your meter readings regularly and submit them to your supplier so your bills are as accurate as possible.
“If you are in credit, it’s probably best to leave the money with your supplier to act as a buffer in the autumn and winter.
“If you are behind on your bill payments, or your energy account is going into debt, speak to your provider as soon as possible as they may be able to help you find a solution.”
See YourMoney.com’s How to get help with your energy bills for more information.