UK households £1 billion in energy bill debt arrears

When totaling the amount of energy bill debt owed by all households across the UK, the total stands at just under £1 billion. There are well over 2 million accounts that are in arrears, and money is owed for both electric and gas bills.

The problem is getting much worse. The report from Ofgem indicates that the number of utility accounts that are in arrears has increased about 15 to 20 per cent year over year. This is even occurring as some of the energy suppliers have reduced their rates due to falling oil prices and the rate is also increasing as the economy is strengthening.

The customers that are in energy bill debt arrears also owe a significant amount to their suppliers. When looking just at electricity, the average arrears on an account is over £350 and almost £400 is owed for electricity. This has lead to an increase usage of pre-payment meters according to a study done by Ofgem.

The amount of energy arrears is even higher for those families that have not started to clear their debts using a payment plan. Those customers that have not started to pay their bills are almost £1000 in arrears. The report from Ofgem shows that many of these individuals are the most vulnerable to losing their power, such as seniors or an individual with a disability. However some people now owe so much that it will be difficult for them to ever pay down their bills to keep their power on.

Many suppliers, often with direction from the court, are installing pre-payment meters in households. About 15% of gas customers use a meter, and almost 20% of people use a PPM for their electricity, with tens of thousands of more being installed yearly. The aim was to help a supplier recover debts.

However the meters are not solving the problem, as those families are still missing payments as well. Even though Ofgem estimates that a PPM can help a family save up to £300 per year, the vulnerable are still missing struggling. This is shown by the greater number of people not making payments on their utility bills. Almost 4.5 million households, which is almost 10 million individuals, struggle to heat their homes, and millions of them have pre-payment meters.

There is no easy solution to the debt problem plaguing the UK, especially since the amount of arrears is so large at £1 billion. Organisations such as National Energy Action call for more regulations, and the report from Ofgem shows that if a supplier works with a customer or an affordable payment plan, then that may work too. Find several ways to get help with debt arrears.

Whatever it takes to help a family manage their energy debts will be beneficial. Whether it is a cheaper tariff or energy efficiency, solutions need to be found by each and every energy supplier. As if a family has their heat disconnected, this will just put more of a strain of the welfare schemes and safety net programmes in the UK, which is not good for any person or company.