2m Households in Debt to Their Energy Suppliers

600,000 households have fallen behind on their energy bills since February, taking the total number of households in arrears to 2.1 million, new research from Citizens Advice has revealed.

The report, based on data gathered from large and medium energy suppliers in late September, reveals that scale of financial hardship in the UK following the coronavirus pandemic.

Energy debt isn't just widespread, it's also potentially ruinous. Billpayers who have fallen behind and haven’t reached a repayment arrangement with their supplier yet owe an average of £760 for electricity and £605 for gas, Citizens Advice calculated.

Additionally, 16% of consumers with pre-payment meters, a total of 700,000 households, including some of the most vulnerable, have not been able to afford to top up their meters since March. Suppliers have been extending these households emergency credit, part of an agreement reached with the government to keep people on supply during the coronavirus crisis.

The timing of the debt is often worrying. Pay-monthly energy customers often build up credit balances over the summer, which are eaten up by boilers during the colder winter months. With employment support schemes running dry and energy bills rising, Citizens Advice forecasts that an additional seven million households could struggle to afford their electricity and heating this winter.

Alistair Cromwell, acting chief executive of the consumer charity, said: “We’re heading into the coldest months of the year and the full financial impacts of the pandemic are still to be felt.”

Despite the grim debt totals, evidence suggests that support offered by suppliers to customers during the crisis has been relatively effective. Six in 10 (59%) of people in financial difficulty who spoke to their supplier told Citizens Advice that the offered support mechanisms—including the suspension of disconnections; issuing of emergency credit; and reassessment, reduction and pausing of repayment plans—were helpful. Just 16% disagreed.

However, the consumer champion raised concerns that customers are struggling to contact their suppliers, which have made a rocky transition to home working. Call waiting times have increased for two-thirds of suppliers and, on average, energy companies are failing to respond to a third of customer emails within two working days.

These findings echo research from Which?, which revealed that a third of energy suppliers are keeping customers on hold for more than 10 minutes. The worst offender, Boost Energy, the pay-as-you-go brand of energy giant OVO, is keeping callers listening to canned music for an average of 40 minutes and 58 seconds.

Customer service standards are “more critical than ever,” and suppliers need to ensure customers can get in touch with them quickly and easily, including by telephone, Citizens Advice said.

Cromwell said: “The government and the energy industry have put in place significant measures to support people’s incomes and help those struggling with their bills. This has made a real difference to many, but this effort will be undermined if people can’t get through to their suppliers and access that support in the first place.”

Citizens Advice is also urging the government to ensure the hardest hit households have help to afford their bills this winter, including through fuel vouchers.

Additionally, firms should continue to offer payment holidays and emergency pre-payment credit for the duration of the pandemic.

Under new regulations that came into force on Tuesday, 15 December, energy suppliers are required to extend emergency credit to struggling pre-payment customers and to offer credit customers tailored repayment plans. While many suppliers have provided this support in the past, new Ofgem rules require it as part of their supply licence conditions.