Unexpectedly High Energy Bills Could Push More People Into Debt

Consumers are finding their energy bills are unexpectedly higher than last year, despite a mild winter and less energy usage. As a result more could find they are facing debt problems.

Research from Consumer Focus reveals 40% of consumers found their winter energy bill higher than last year, with almost a third finding their bill higher than expected – all this even though we’ve had a relatively mild winter which resulted in falls in energy usage.

Of course some were able to cut their energy usage over the mild winter and thereby saved on their energy bills. But many had already cut back as much as possible to save money and consequently the higher prices left them with unexpected bill increases.

Most energy firms’ price cuts didn’t come into effect until late winter – so at the start of January 2012 the average annual amount of energy cost over £180 more than the year before.

Consumer Focus and Citizens Advice are warning that these unexpectedly high bills could mean more people end up with debt problems as they struggle to pay them.

As part of their ‘Plug the Debt‘ campaign, the organisations are urging any customer struggling to afford their energy bill to get in touch with their energy firm and to contact Citizens Advice for help and information.

To save money, consumers plan to reduce the amount of energy they use, cut back on seeing friends and family, taking holidays and buying goods such as clothes and music. Some are looking to cut back on food, with some 20% of the poorest consumers having to cut back on eating to afford heating.

If energy prices rise further, many more people think they will be unable to afford to pay their bill. A third won’t be able to afford to pay if their monthly bill rises by £30 and over half can’t afford to pay if their monthly bill rises by £50.

“Gillian Guy, Citizens Advice Chief Executive, said: “High energy bills are stretching some household budgets to breaking point. If you are worried you can’t afford to pay your bills and they are mounting up – don’t suffer in silence.

“Speak to your energy supplier as they have a duty to make sure you are repaying what you can afford. Citizens Advice Bureaux can also help you to find out what help is out there to cut your bills and claim any benefits you could be entitled to.”

With help from Consumer Focus and Citizens Advice here are five top tips to help if you fall behind with your energy bills:

1.    Contact your energy firm as soon as you struggle to pay -  Debts won’t go away and will just build over time and be harder to pay off. Your supplier has a responsibility to help you if you have problems paying your bill.

2.    Tell your energy supplier what you can afford to pay – they have to take this into account in agreeing repayments of the money you owe.

3.    Find out about free energy help available – for example you may qualify for a discount off your bill or free insulation to help your home stop leaking heat and cut your bills. Speak to your energy company, your local Citizens Advice Bureau or call the Home Heat Helpline 0800 33 66 99.

4.    Even if you are in debt you may still be able to switch to a cheaper deal with your current supplier, especially if you pay by cash, cheque or prepayment meter. If you pay by pre-payment meter and have less than £200 of debt you can also switch to a cheaper deal with another supplier.

5.    Check you are receiving all of the benefits and tax credits you are entitled to – get in touch with your local Citizens Advice Bureau for advice.

MoneyHighStreet comments: “Tackling debt problems sooner, rather than later, is very sound advice. They are not going to go away by themselves and really need to be addressed. Take professional debt advice if need be.

“As mentioned above, some consumers are looking to redue their energy usage to save money. There are a myriad of ways to help with this. For example, how about switching lights off when you leave a room? Or when boiling a kettle to make a mug of coffee, only boil enough water to make the single mug and not several mugs of coffee.

“Our article ‘Six ways to save money on your energy bill‘ may be useful and help you with ideas, including of course switching energy supplier if need be.”

Information on how you can save money on your energy bills by switching payment type, tariff or supplier and insulating their home, is available on the DirectGov website energy advice pages.