New
Ofgem statistics on energy debt and disconnections are the tip of an iceberg and raise growing concerns about the affordability of energy in Britain today, says uSwitch.com, the independent price comparison and switching service.
According to
Ofgem’s Domestic suppliers' social obligations 2009 Annual report, disconnections continued to decrease in 2009, particularly for gas and the number of people repaying a debt has remained broadly static, however there has been a significant increase in people entering debt repayment arrangements for the first time and in people with bigger debts.
Ofgem says the average weekly repayment amounts have generally increased and there was an overall rise in the number of prepayment meter (PPM) customers, largely due to a rise in the installation of PPMs to recover debt.
Other findings of Ofgem’s report were:
• Over one million electricity customers and 800,000 gas customers ‘officially' repaying a debt
• Number of customers entering into new debt repayment arrangements increased by 19 per cent for electricity and 18 per cent for gas - average level of debt being repaid has shot up from £256 to £277 for electricity and from £209 to £287 for gas
• But Ofgem does not include customers who are not on debt repayment programmes - uSwitch.com research shows that 5.5 million UK households (21 per cent) are in debt - average debt on bills is now £132 - 5 per cent higher than 2009 (£126) and 16 per cent higher than 2008 (£114)
• Number of PPM customers goes up to 3.8 million for electricity and 2.6 million for gas - increase mainly driven by higher number of PPMs installed to recover debt.
"These statistics are sign of a far bigger malaise and raise a huge question mark over the ongoing affordability of our energy,” said Ann Robinson, Director of Consumer Policy at
uSwitch.com.
“Ofgem's numbers are damning enough, but they completely overlook households that owe money to suppliers but are not on an official repayment programme.
“Our research shows that 5.5 million households owe money to suppliers. When you start to look at both groups side by side you can start to get a true sense of the size and scope of the issue we face over affordability.
"Household energy bills rocketed by 42 per cent or £381 in 2008 and even though prices have since dipped households are still feeling the pain. With pressure to invest and an increasing number of environmental levies being passed onto consumers, the only way energy bills will be going is up.
“Nine million consumers are already using debt to fund their living costs and looking ahead to the end of the year, six million consumers say they will struggle to pay household bills on time.
“With consumers facing these kinds of pressures we are going to see energy become increasingly unaffordable.
"While we welcome the fact that Ofgem has brought prepayment meter [PPM] prices in line with standard cash and cheque prices, we are concerned that more and more households are moving to PPMs. They are expensive and should certainly not be seen as a quick fix solution.
“I would urge suppliers to talk to struggling households about their most competitive plans before moving them to a PPM. Although not suitable for all households, online plans are around £300 a year cheaper than being on a PPM - a big saving for those who are worried about paying their bills."
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