Level of energy debt is on the rise

published 5 April 2012

Consumers are more indebted to energy suppliers that they were a year ago as a result of higher fuel prices which have pushed bills up by a whopping 17 per cent.

According to a study by comparison website uSwitch, households now owe, on average, £131 to their energy suppliers - 4% more than last year, 15% more than in 2008, and adding up to a total debt of £478m.

The average energy bill is now £1,252, £183 more than around the same time in 2011, signalling another increase in debt levels next year.

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Of those in debt to an energy company, just 13% owe less than they did this time last year, while 35% owe more.

The rises come despite energy providers taking steps to reduce energy bills by £41 or 3.2%.

Ann Robinson, Director of Consumer Policy at uSwitch, says: "With households still struggling to absorb last year's price hikes, energy debt is on the rise again.

"Although suppliers have cut their prices this year, the average reduction of £41 or 3.2% doesn't come near the average increase of £224 or 21% seen since the end of 2010 - as a result consumers will continue to struggle to pay their bills and debt will continue to grow.

"Those in energy debt can face a catch-22. Despite knowing they could reduce their bills by moving to a cheaper energy plan, consumers can see debt as a barrier to switching."

Close to one in 10 people who are in debt are agreeing to a repayment plan, 21% want to pay off their debt with a lump sum, while 3% are expecting to move onto a pay as you go meter.