Household energy debt up by a quarter over the last year

Household energy debt has risen by a quarter over the last year, analysis by the price comparison website uSwitch has indicated.

Three million households collectively owe nearly £400 million to their supplier despite the prolonged hot weather over the summer.

The findings were reached by extrapolating from an online poll of over 2,000 people conducted by Opinium between 9 and 12 August.

The research suggests more than one in ten bill payers (11 per cent) are in arrears and owe their supplier an average of £134 each.

Over the past 12 months, the number of households in debt has increased by over 300,000 (12 per cent) and the total debt owed has swelled by £75 million. The figure is up more than £100 million (36 per cent) when compared to same point in 2016.

The higher level of arrears this year follows an “unprecedented number of price hikes” from suppliers both large and small.

According to uSwitch, 32 providers have announced 55 price hikes since January, adding nearly £900 million a year to domestic energy bills.

Many suppliers have cited growing wholesale costs as the main reason behind their increases.

The survey also found around two in five consumers (41 per cent)  – the equivalent of over 11 million households – are worried about how they will afford to pay for gas and electricity over the winter.

When asked how they plan to pay off their debt, 34 per cent of customers in arrears said they intend to increase their monthly direct debit, while 20 per cent said they are aiming to clear their balance in one lump sum.

Only 15 per cent plan to agree a repayment plan with their supplier and 20 per cent are either hoping that the amount will go down naturally over time or do not know how they are going to pay the debt off.

Meanwhile, 3 per cent do not think they can afford to pay back what they owe.

Rik Smith, energy expert at uSwitch, said the number of households in debt to their suppliers is a “clear indication” of the pressure people are under to make ends meet.

“With winter just around the corner, it’s important that households use this time to tackle rising bills,” he added. “After so many price rises this year a lot of people may have received a price rise notification over the summer but not switched to a cheaper deal.

“Now is the time for consumers to take action, by making their homes more energy efficient or ensuring they don’t pay any more than they need to for the energy they use.”