Power firms owed £630m as price rises hit consumers

MORE than £630 million is owed to energy companies as customers struggle to manage spiralling prices – with almost one in five households currently in debt to their supplier.

And half of the five million families who have not paid outstanding bills to their electricity and gas companies admit that their debt is now higher than it was a year ago, according to a new report by uSwitch.com.

Energy prices have rocketed in recent years. The typical household energy bill now stands at £1,353 a year – almost £100 more than a year ago and £831 more than at the start of 2004.

Despite the increase, the average debt per household has fallen by £8 to £123, the report discovered – although experts warned that the impact of this winter’s price rises, combined with the coldest March on record could see the figure shoot back up again.

“The soaring number of households in debt to energy suppliers is a clear indication of the pressure people are coming under just to meet the cost of their basic bills,” said Ann Robinson, director of consumer policy at uSwitch.com.

“The fact that a million more households have fallen behind in the last year so that over five million are now in debt to suppliers tells us everything we need to know about the impact of sky-high energy prices.”

She warned that households struggling to pay utility bills should ensure that their homes are energy efficient, and also take advantage of direct-debit discounts.

“Consumers should also make sure that they or their supplier are taking regular meter readings, as relying on estimated bills can be a shortcut to debt,” she added.

Last week, Perth-based SSE was slapped with a record £10.5m fine after industry regulator Ofgem found the firm guilty of “prolonged and extensive” mis-selling.

The inquiry by the watchdog found that SSE provided inaccurate and misleading information on prices and potential savings to customers about switching suppliers.

Three other Ofgem investigations are pending – into Glasgow-based ScottishPower, nPower and E.ON. In March, EDF Energy was fined £4.5m.

Worry over mounting debt is leading almost one in ten to agree a repayment plan with their supplier, while 2 per cent expect to move onto a pre-payment meter to manage their usage – a more expensive method of paying for energy.

The main energy companies have agreed to review the bills of their most vulnerable customers to ensure they are on the cheapest tariff available, but do not have to do so for the majority..

Elizabeth Gore, spokeswoman for Energy Action Scotland, said: “The bottom line is that gas and electricity prices have suddenly become an issue for a lot of people.”