Two million housholds in debt to energy supplier
Energy firms are taking people to the wall, shamelessly overcharging them for what is often a poor service to the point where their customers find themselves neck-deep in debt.
A shocking two million households are now in debt to energy firms. Two million.
This is because people don't shop around for a better energy deal and many don't even notice when their energy company raises costs.
New research by Ofgem reveals the number of electricity customers in debt last year increased by 4.2 per cent to 1.31million, and by 4.8 per cent to 1.05million for gas customers.
Suppliers are bound by Ofgem rules to help customers manage debt if they are struggling to make payments, including by putting them on an affordable repayment plan.
This can also involve installing a prepayment meter but Ofgem states this must only be done as a last resort.
A prepayment meter is a device that uses a pay as you go tariff so customers pay for their energy before they use it.
But suppliers have been criticised by Ofgem for not moving quickly enough to respond to indebted customers, despite the debt level rising.
The number of customers on repayment plans rose by 1 per cent for electricity to 661,339 and by 0.4 per cent for gas to 543,520 last year.
But the amount of families in debt that weren't on a repayment plan went up by 8 per cent for electricity customers (to 648,000) and by 10 per cent for gas customers (to 505,000).
Ofgem fears that suppliers could push struggling families further into debt if they don't act sooner.
However, energy companies have been praised for offering more support for vulnerable customers.
In the past year, the report found over 850,000 free services were provided by electricity companies, while 650,000 free acts of assistance were recorded for gas customers.
This marks an 8.5 per cent and 4.4 per cent rise respectively, with help ranging advice on from managing everyday energy usage, to providing braille or large print bills.
Ofgem said there is no set criteria for who qualifies as vulnerable and said it can be anything from illness to disability, to a sudden change like losing a job.
The number of prepayment meters forcibly installed by suppliers to collect a debt fell by 15 percent to 71,000.
It comes after Ofgem introduced new rules in 2018 to encourage suppliers to cut down on prepayment meters being installed by force.
Energy suppliers must make sure the installation of a prepayment meters is appropriate for the customer.
Mary Starks, executive director for consumers and markets at Ofgem said: “Some suppliers are simply not keeping up with the rising numbers of customers who owe them money.
“It’s imperative that suppliers move quickly and efficiently to help struggling customers manage paying back their debts, or risk pushing them further into hardship.”
A spokesperson for Energy UK, which represents energy suppliers, said: “The energy sector is committed to improving services for all customers including those in most need, which is why we set up the independently-Chaired Commission for Customers in Vulnerable Circumstances.
“We have committed to bringing forward a new Code of Conduct to build on the Commission’s report and existing voluntary initiatives and will work closely with Ofgem on how we can improve services further for customers.”
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