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Fuel Poverty News

UK households in debt to energy suppliers
11 Mar 2010

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UK households have fallen deeper into debt with energy suppliers, with customers now owing an average £132, according to a recent study by price comparison website, Uswitch.

The study revealed that 5.5m households, or 21 per cent, are in debt to their energy suppliers, with total debt amounting to around £728m. Despite the poll finding that the number of households owing money has dropped 4 per cent, it also showed that the average amount owed by consumers was 5 per cent higher than in 2009 and 16 per cent higher than in 2008.

The figures follow recent gas price cut announcements across the industry amid falling wholesale prices. But despite some suppliers having implemented mild price cuts – an average of 3 per cent – these cuts have not been significant enough to ease consumers’ burden, particularly when the UK has gone through one of the coldest winters in decades.

Ann Robinson, director of consumer policy at uSwitch, said: ”The impact of the 42 per cent, or £381 hike in energy prices in 2008 cannot be underestimated. Consumers are still feeling the pain and subsequent price cuts have done little to ease this.

“This has clearly taken its toll with the average amount owed on energy bills increasing by 16 per cent since 2008, yet again raising serious concerns about the affordability of energy in this country.”

Uswitch said that households have been under financial strain to pay their energy bills. Around 41 per cent said that they owe more than they did the same time last year whereas only 17 per cent reported that they now owe less.

Ofgem, the UK energy regulator, has estimated that by 2016 the average annual energy bill in Britain could have risen 60 per cent to £2,000. That increase would represent more than 10 per cent of household disposable income once essentials such as housing, food and clothing are taken care of.

The government considers consumers to be in ’fuel poverty’ if they have to spend more than 10 per cent of their household income on fuel to keep their home in a ’satisfactory’ condition.

The energy bill will hit the poor households the hardest who need to distribute a bigger portion of their income to pay for energy. ”Households will have to adapt if they are to protect themselves from spiralling energy bills,” said Ms Robinson.

“There are two key steps to this - make sure you are paying the lowest possible price for your energy and cut down on the amount of energy you use. Consumers should also make sure that they or their supplier are taking regular meter readings as relying on estimated bills can be a shortcut to debt. Any consumers who are concerned about managing their energy bills should contact their supplier to discuss the options,” she added.

Meanwhile, other research out on Thursday revealed that 43 per cent of consumers are overpay for their gas and electricity, which means that utility companies could be holding on to an extra £1.3bn of their customers’ money, according to new research by comparison website

The research also found that most people find their utility statement difficult to understand, with 36 per cent saying that they think bills are kept deliberately confusing. A quarter of those surveyed thought that their energy bills were full of jargon, and 29 per cent said that they were badly laid out.


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Source: Financial Times