Households are already in debt as energy bills soar

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Anxious woman is looking at bills

Many households are falling behind on energy payments as total debt triples to September last year, according to a survey.

Almost a quarter of households owe an average of £206, according to comparison site Uswitch, which surveyed 2,000.

Uswitch advised people running into debt to speak to their provider to work out a more affordable payment plan.

The data comes from consultancy Cornwall Insight’s warning that October’s energy bills could rise much higher than previously thought.

The consultancy also expects bills to rise much more sharply in January, with the average household paying £355 a month instead of the current £164 a month.

Citizens Advice said it has helped more than 47,000 people with energy debt so far this year. The average amount owed was more than £650, the charity said.

“Every day we hear from people who can’t afford to turn on the lights or cook their kids a hot meal,” said Morgan Wild, director of policy at Citizens Advice.

“The government has done the right thing with the targeted support, but it will not be enough for the people to cope with these previously unthinkable price increases.”

Meanwhile, Chancellor Nadhim Zahawi and Economy Minister Kwasi Kwarteng are set to hold talks with energy giants on Wednesday morning to discuss measures to lower the cost of living.

There are two main reasons why households borrow from their supplier: The first reason is that their direct debit payments may be underestimated to cover the amount of energy consumed.

Anyone finding themselves in this situation should contact their supplier as soon as possible to avoid a sudden bill shock and update them with the correct meter readings.

The second reason is that people just aren’t keeping up with their payments.

The latest price cap – the maximum amount suppliers can charge their customers for average energy consumption in England, Scotland and Wales for October – is due to be announced by energy regulator Ofgem later this month.

The Uswitch survey found that in addition to the indebted group, eight million households have no credit, meaning they have no cushion against this winter’s bill hikes.

“This is an alarming situation as summer is traditionally a time when homes use less electricity for heating, which helps billpayers build up energy credits ahead of winter,” said Justina Miltienyte, head of policy at Uswitch.com.

“It suggests that the cost of living crisis is already dramatically squeezing budgets, even in the summer months, as families grapple with soaring bills across the board,” she said.

An Ofgem spokesman said its “priority” is to “protect consumers” and ensure suppliers are treating their customers “fairly and fairly”.

This included “proactively” reaching out to determine if a customer was experiencing payment difficulties, assessing repayments based on a customer’s ability to pay, and ensuring debt management activities were conducted in a “fair and reasonable manner,” the spokesman added. .

“We closely monitor compliance and take action where necessary.”

“Anyone struggling to pay their bills should speak to their supplier, who is required to offer payment plans and direct customers to available support. Ofgem will ensure they do so,” the spokesman said.

Analysis box by Colletta Smith, Consumer Affairs Correspondent

Again, the old advice to shop around to find a better energy deal just doesn’t apply anymore. While the default price cap is very high, it is the best price currently available. Therefore, it is not a good idea to sign up for a fixed offer.

If you fall behind on your energy payments or are unable to keep up with your supplier’s proposed direct debit increases, the first thing you should do is let them know you’re having trouble.

It might be difficult to make that call as admitting you’re having trouble is never easy, but it’s probably your household’s best protection this winter.

Taking action is important because additional legal help is available to those unable to pay, forcing suppliers to work through many different options with their customers. These include arranging a payment plan, providing temporary credit to prepay customers, and arranging direct payment through benefits.

Crucially, that call to explain you’re having trouble means they can’t just interrupt you.

What help can I get?

The Government will give all homes in England, Scotland and Wales £400 to help with rising heating bills this autumn.

The money, which is part of the Energy Bill Support Scheme, will be paid in six installments.

Meanwhile, a payment of £650 will be made to more than eight million low-income households who receive Universal Credit, tax credits, pension credits and other means-tested benefits.

Disabled people also get £150 (plus the £650 payment if they also qualify).

And pensioner households receiving the winter fuel payment will get £300. So in theory, a low-income pensioner who has a disability could get £1,500.

Eligibility will also be extended for the Warm Home Discount, which offers low-income households a one-off annual rebate of £150 on their electricity bill between October and March.

It’s also worth talking to your supplier. All major energy companies have hardship funds.

If you can’t get a grant from your own supplier, you may be able to get one from the British Gas Energy Trust, which is being offered to anyone in need, not just customers of the company.

BBC Action Line may provide links to charities that help with debt and financial problems.



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