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Post lockdown energy bill shock for millions of households

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Written by: Emma Lunn
09/09/2020
Millions of energy customers could be in for a substantial bill shock this autumn due to a combination of increased energy usage during lockdown and working from home.

According to research from Compare the Market, increased energy consumption may mean households owe £145 more than they think since the beginning of lockdown.

If left unchecked, this figure could jump to £294 by the end of the year.

Those households that needed to take a three-month payment holiday from their energy bills due to the financial impact of Covid-19 could owe an additional £316.

Energy usage surge

Previous research from Compare the Market found that 72% of households in the UK saw energy usage surge in the first half of the year due to increased use of household appliances such as dishwashers, washing machines, ovens and hobs, lighting, gaming, TVs and laptops.

If left unchecked by their supplier, households which pay their bills by direct debit could face a mounting debt balance. Due to Covid-19 restrictions, energy suppliers didn’t send meter readers to properties to take readings while lockdown was in place. Smart meter installations were also put on hold.

Domestic energy usage is typically lower in the summer months but increases in the last three months of the year. A colder than usual autumn or winter could lead to households owing even more for their energy bill if they are working from home when they wouldn’t be usually.

Payment holiday warning

Compare the Market warns that the issue could be even more pronounced for a household that had to take a payment holiday.

If a three-month payment holiday was granted, and that the same household also increases their energy consumption in the colder months, they could face an additional £316 debt and may end 2020 owing £610 to their energy supplier

Peter Earl, head of energy at Compare the Market, said: “There is mounting concern that millions of households could be facing a substantial debt balance on their energy bills at the same time as the temperature drops.

“A combination of lockdown and millions more people working from home has meant energy usage has shot up. Many people pay their energy bills by direct debit, set up when they first opened their account. However, if their meter reading is out of date they could be in for a substantial shock when this is finally updated to reflect their actual usage.

“As such, we highly recommend that energy customers take a reading of their gas and electric meters now. One way that households can substantially reduce the amount they pay for their energy is to switch supplier. All too often, millions of households roll over onto their supplier’s standard variable tariff when they could save hundreds of pounds by switching to a competitively priced one or two-year fixed-rate tariff.”

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