Energy bills rising means people are falling behind

Total debt for many people has risen to three times the price since last September. This data was taken from a survey analysis. Households are falling behind on energy payments. According to the Uswitch comparison site, almost one-quarter of people registered as households owe £206 on average. Uswitch totalled a survey of 2,000.

If you’re falling into missed payments

Uswitch recommended anyone sliding into debt, speak to their provider to find a payment plan which they found practical and affordable.

With rising living costs, the government said it had ‘continually taken action to help households.’ Consultancy Cornwall Insight warned energy bills could increase unexpectedly in October.

Changes to energy rates

The consultancy predicts energy bills rising dramatically in January. The average household could pay £164 per month currently but be expected to pay £335 instead.

Citizen’s Advice said it has helped over 47,000 people with energy debts so far this year.

‘Every day we hear from people who can’t afford to turn the lights on or cook their kids a hot meal,’ said Morgan Wild, head of policy for Citizen’s advice.

“The government did the right thing by bringing in targeted support, but it won’t be enough for people to manage these previously unthinkable price hikes.”

The charity stated the average debt was more than £650.

Talks with energy suppliers on support

Previously, Prime Minister Boris Johnson never announced extra support in addition to the £15bn package set out in May. He received mounting criticism for this.

Martin Lewis consumer expert has made a hint to “wake up” directed at what he calls the “zombie government” to construct a plan swiftly this time.

Talks have been set by ministers, with energy giants on Thursday to speak about measures possible to ease the increased living costs.

Business Secretary Kwasi Kwarteng and Chancellor Nadhim Zahawi will meet bosses to talk over sector profits and rising costs.

Octopus energy boss additionally said he believed the government needed to better its offer of £400 for each household in England, Scotland, and Wales, helping to manage increasing energy prices.

Wintertime raises credit concerns

The initial package may have been accurate when introduced- Greg Jackson told the BBC’s Today Programme, however, it’s “clearly not sufficient now and we need to look at similarly significant assistance from the government for this winter”.

More from G. Jackson “this needs to be the absolute top item in the in-tray of the incoming prime minister. Tackling energy bills is critical to ensure people can get through this winter.”

The Department for Business, Energy and Industrial Strategy spokesperson gave word to the BBC: “We know the pressures people are facing with rising costs, which is why we have continually taken action to help households by phasing in £37bn worth of support throughout the year, and everyone will receive a £400 discount on their energy bills over winter.”

E.On reported first-half profits sliding slightly under 4.1b euros (£3.5bn), amounting to around 700m euros the year before.

Europe’s energy system needs transformation

E-On is one of the UK’s largest energy suppliers, they referred to the energy crisis as ‘extraordinary’ and spoke with emphasis that Europe needed “transform its energy system. To be independent of Russian gas. To ensure supply security”.

Increasing bills everywhere

Households fall into debt for two predictable reasons with their supplier. One: their direct debit payments may be set too low to cover the amount of energy being used.

If anyone finds themselves in that situation, they should speak to their supplier in advance to remove any potential shock when the bills are next sent. Accurate meter readings are essential.

Not keeping up with payments is the second reason people fall into debt.

The latest price cap- for average energy usage in England, Scotland, and Wales for October, suppliers can charge customers up to this amount. The price cap is set to be announced at the close of the month by the Ofgem energy regulator.

Analysis by Colletta Smith, the Consumer affairs correspondent

‘It is worth saying again that the old advice to shop around to find a better energy deal just does not apply anymore. The default price cap, although super high, is the best rate available at the moment, so signing up for a fixed deal isn’t a good idea.

If you are falling behind on your energy payments or are unable to keep up with the increase in direct debits being suggested by your supplier, then the first thing to do is let them know you’re struggling.

Making that call might be tough, as it’s never easy to admit you’re finding things difficult. However, it’s likely to be the best protection for your household this winter.

Taking action is important because there is an extra layer of legal help available for people who are unable to pay, which forces suppliers to work through lots of payment options for their customers. That included agreeing on a payment plan, giving temporary credit for pre-payment customers, and arranging for payment directly through benefits. Crucially, making that call to explain you’re struggling means they can’t just cut you off’.

Ofgem highlights the importance of customer care

The Uswitch survey conveyed data which, along with the group in debt, 8m households have no credit balances, meaning they have no cushion against the bill rises, this wintertime.

“This is an alarming situation, as summer is traditionally a time when households are using less power for heating, which helps bill payers to build up energy credit ahead of the winter,” said Justina Miltienyte, head of policy at Uswitch.com.

“It suggests the cost-of-living crisis is already squeezing budgets dramatically, even during the summer months, as families struggle with rising bills in all areas,” she stated.

Ofgem spokesperson said its “priority” is to “protect consumers” and make ensure suppliers treat their customers in a “fair and reasonable manner”.

This meant “proactively” making contact to identify if a customer is having trouble making payments, looking at repayments on a customer’s capability to pay, and making sure debt activities are done in a “fair and reasonable way”, the spokesperson added.

“We closely monitor compliance if this and take action when needed”.

“Anyone struggling to pay their bills should speak to their supplier who is obliged to offer payment plans and direct customers to available support. Ofgem will ensure they provide this,” the spokesperson stated.

If your finances feel like they’re already running away from you, a formal debt solution could be a more effective option to deal with your debts. If you’d like to find out more about the debt solutions available to you, give us a call on 0141 816 0394 or complete our enquiry form.