Debt repayment plans soar as energy costs bite

Published: 22 January 2010 By MoneyHighStreet Staff Leave a Comment
Updated: 22 January 2010

There has been a large increase in energy customers entering into debt repayment plans as energy costs become less affordable.

Energy pricesHousehold energy bills are forcing an increasing number of people to seek debt relief as the costs of their gas and electricity become prohibitively high, according to Ofgem’s quarterly social obligations report.

The reports shows that there has been a 13% increase in the number of electricity customers entering into debt management agreements compared to the third quarter of 2009.

Gas customers are also faring badly as the report indicates that there has been a 21% increase for gas users making similar debt relief arrangements.  The average level of energy debts has also risen, being 20% higher than it was a year ago.

The recession is partly to blame, Ofgem states, however higher energy prices are also exerting an affect of the ability of households to afford their heating and lighting bills.  The average household now faces an annual energy bill of £1,239 – £327 or 36% more than at the beginning of 2008.

Commenting on this rise of energy indebtedness, Thomas Lyon, energy expert at uSwitch.com, says: “These debt numbers could get worse as we are in the middle of a bitter winter which could add an extra £60 onto our next quarterly bills because of the extra heating and energy we’ve all had to use. This will hit those who pay by cash or cheque particularly hard and some may see no alternative but to enter into a debt arrangement with their supplier.”

Households can make some savings to their energy bills by moving to direct debit tariffs and switching their energy provider to find the best online deals.

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