ENERGY DEBT DOUBLES IN A YEAR TO £1 BILLION WITH A QUARTER OF CONSUMERS IN DEBT TO THEIR SUPPLIER

• The amount of money households owe to their energy suppliers has doubled in a year to reach £1 billion — with a quarter (23%) of consumers now in energy debt[1]
• Six million households owe £188 to their energy providers on average — leaving them without a war chest to battle rising bills[1]
• Almost 11 million households have £1.4 billion in credit balances, with more than one million bill-payers owed over £300[2]
• The overall credit is £500 million lower than last year[2] with rising energy prices preventing people from building up a nest egg 
• Of the biggest providers, Octopus Energy has the largest proportion of customers in debt (33%), while OVO has the most in credit (50%)[3]
• Two thirds of homes in credit (66%) are going to leave the money with their supplier to help manage their monthly bills[4]
• Uswitch.com is advising consumers to report meter readings every month to ensure bills stay as accurate and is providing a video guide on how to do this.

The amount of money that households collectively owe to their energy suppliers has doubled in the past year to reach £1 billion, with a quarter (23%) of consumers now in energy debt[1], according to new research from Uswitch.com, the comparison and switching service.

The number of households in debt to their supplier has risen by half (52%) compared to this time last year, with six million homes now owing an average of £188 to their energy provider[1]. The amount of households in debt is more than two million higher than at any point in the last four years, and the average debt is 54% higher than it was in 2019[5[.  

The average amount owed is £58 more than this time last year, leaving many without a war chest to battle rising bills[1]. 

At the same time, almost 11 million households have a collective £1.4 billion in credit balances with their supplier, making them better prepared for the expected price hikes in the autumn. However, the overall figure is £500 million lower than last year, which suggests that rising prices have made it more difficult for people to build up a nest egg of credit[2]. 

Nearly two in five households (38%) are in credit with their supplier, a decrease of almost a fifth (18%) compared to last year[2]. The average amount of credit is £135, but more than one million consumers have over £300 credit with their supplier[2]. 

Of the biggest energy providers, Octopus Energy has the largest proportion of customers in debt (33%), OVO has the most in credit (50%), while EDF has the highest proportion of customers with neither debt or credit (39%)[3].

Source: Uswitch.com

Rising bills mean that many consumers are taking a different approach to their credit balances. Rather than asking their supplier for their credit balance to be returned,  two thirds of people in credit (66%) plan to leave the money with their supplier to try to reduce their monthly bills. Only one in ten (10%) intend to ask their supplier to return some of their credit[4].

Four in five (80%) consumers have attempted to cut down their energy use at home amid rising prices, with two fifths (39%) turning down the thermostat, a third (33%) only using the heating on days it felt particularly cold, and 15% turning off their heating entirely[7]. 

Uswitch is advising consumers without a smart meter to keep on top of their energy usage and  report meter readings every month, to ensure bills are as accurate as possible and avoid building excessive debt or credit on their account.

Justina Miltienyte, energy policy expert at Uswitch.com, said: “Higher prices over the winter has meant we are seeing many more people in energy debt at a time when they should be building up their credit again.

“This means that households across the country are likely to see their direct debits rise so they can begin to pay back what is owed, making it tough to prepare for future increases.

“The  reality is that the situation is going to get far worse in October when we expect another price rise, so it’s important to take control of your energy use now. 

“If you do not have a smart meter, record your meter readings regularly and submit them to your supplier so your bills are as accurate as possible.

“If you are in credit, it’s probably best to leave the money with your supplier to act as a buffer in the autumn and winter. 

“If you are behind on your bill payments, or your energy account is going into debt, speak to your provider as soon as possible as they may be able to help you find a solution.” 

Find out how you could save with Uswitch in the new cost-of-living hub here.

Notes

Research conducted online by Opinium, 4th-13th April 2022, among 4,000 UK energy bill-payers, weighted to be nationally representative.

1. Respondents were asked ‘Thinking about your most recent energy bill from your supplier, which of the following best applies to you?’ 23% said they were in debt to their supplier. 23% of 28.1 million UK households = 6.4 million households in energy debt. The average amount of energy debt was £188.57. £188.57 X 6.4 million = £1.2 billion. 

2. Respondents were asked ‘Thinking about your most recent energy bill from your supplier, which of the following best applies to you?’ 38% said they were in credit to their supplier. 38% of 28.1 million UK households = 10.7 million households. The average amount households were in credit was £135.03. £135.05 X 10.7 million = £1.4 billion. 4% are in credit more than £300. 4% of 28.1 million = 1.1 million. Average credit last year was £144.82. Last year’s overall credit total was £1.8 billion. 

3. See table. Respondents were asked ‘Who is your supplier? If you have different suppliers for gas and electricity please think of the one you spend the most with’. Supplier names were cross-referenced with average credit and debt. 

4. Respondents were asked ‘Taking into account the recent rise in the price of energy, what do you plan to do about your energy credit?’ 66% said ‘leave it with my supplier to try to reduce my monthly payments’, 10% said  ‘ask my supplier to return some of it’. Respondents in credit this year and last year were asked ‘Are you more or less likely to withdraw your credit than you were last year?’ 48% said ‘less likely to’. 

5. Average debt in 2021 was £130.12, in 2020 was £142.02 and 2019 was £121.79. Proportion of households in debt in 2021 was 15%, in 2020 was 14% and in 2019 was 15%. 

6. Respondents in debt were asked ‘Thinking about the amount you are in debt/arrears with your energy supplier, how does this compare with a year ago?’ 45% said ‘my debt/arrears is higher’. 

7. Respondents were asked ‘Thinking about the winter that has just passed (2021/22), did you attempt to reduce your household energy usage in any of the following ways?’ 39% said ‘turned down the thermostat’, 33% said ‘only used the heating on certain days when it felt particularly cold’, 29% said ‘turned down individual radiators in your home’, 27% said ‘set the heating to come on for less time every day’, 19% said ‘turned on the central heating later in the year’, 15% said ‘turned off the central heating completely’. 

About Uswitch - saving you money for 20 years

Uswitch is the UK’s top comparison website for home services switching. We’ve saved consumers £2.5 billion off their energy bills since we launched in September 2000, and also help people find a better deal on their broadband, mobile and TV.

Uswitch is part of RVU, a global group of online brands with a mission to empower consumers to make more confident home services, insurance and financial decisions.

Cover photo By pcess609 on Canva