• The number of households in debt to their electricity provider is at a five-year high, according to figures obtained by price comparison and switching site energyhelpline.com
  • A Freedom of Information response from Ofgem shows that 777,000 customers were in debt between July and September 2020 – the highest since 2015
  • The number of customers in debt to their electricity supplier has risen in all three quarters in 2020 compared with the respective quarter in 2019
  • Rising wholesale prices have helped increase the cost of the cheapest fixed price energy tariffs by 8% or £63 a year since April
  • Increased home energy use, rising energy prices and further pressure on household finances from the pandemic indicate the beginning of a surge of energy debt across the UK, says energyhelpline.com
  • The price comparison site is calling on Ofgem and suppliers to do all they can to support consumers struggling to pay their energy bills as a result of the pandemic. 

The number of UK consumers in energy debt to their electricity provider has hit a five-year high, according to new figures obtained by price comparison and switching site energyhelpline.com.

Some 777,000 households were in debt in between July and September 2020 – a level not seen since the same period in 2015, figures from a Freedom of Information request to regulator Ofgem show1.

All three quarters during 2020 saw an increase in the number of customers in debt to their electricity supplier compared to the respective quarter in 2019 – with a 12% increase for the period January-March, a 5% increase for April-June, and a 7% increase for July-September1.

The trends indicate the beginning of a surge of energy debt across the UK, according to energyhelpline.com, as COVID-19 restrictions push up home energy use – particularly during the more expensive winter months – against a backdrop of mounting pressure on household finances, also due to the pandemic.

Upward pressure on energy prices

Wholesale energy prices, which make around half of domestic energy bills, have continued to increase since last spring as markets recover from the height of the global pandemic. This, in turn, has helped to raise the cost of the cheapest fixed tariff by 8% or £63 a year since April 2020 (from an average of £758 a year to £821 a year), according to an analysis by energyhelpline.com2.

In addition, the price comparison site is predicting that the Ofgem price cap, which caps the price of Standard Variable Tariffs – typically the most expensive of the market – is likely to increase when next reviewed in early 2021, as a result of rising wholesale prices and the prospect of the regulator allowing further rises within the cap to help suppliers to cover increasing levels of bad debt. If the cap rises, it will lead to higher energy bills for millions, adding to the risk of debt for even more consumers.

The price comparison and switching site is calling on Ofgem and suppliers to do all they can to support the most vulnerable consumers struggling to pay their energy bills as a result of the pandemic.  

Tom Lyon, Director of Energy at energyhelpline.com, says:

“Today’s figures could be the beginning of a surge in energy debt right across the country. Not only are consumers facing higher bills as a result of having to use more energy at home, but the pandemic also leading to the real prospect of more expensive energy into 2021.

“Wholesale energy prices, which make around half of energy bills, have continued to increase since last spring as markets recover from the height of the global pandemic. This, in turn, has helped raise the cost of the cheapest fixed tariff by 8% or £63 a year since April – so now is a good time to fix if you’re looking to switch.

“Standard Variable Tariffs are capped by regulator Ofgem. The cap is reviewed twice a year and although it came down in October, it’s likely that, given rising wholesale costs, it could go up in March. Ofgem is also consulting on plans to raise the cap to help suppliers cover mounting bad debts, adding even more to the risk of more expensive variable plans in 2021.

“It’s vital that energy suppliers and Ofgem do all they can to support consumers who are struggling to pay spiralling energy bills. Customers who are worried should ensure they provide an up-to-date meter reading to ensure their bills are accurate, check they’re on the cheapest tariff, and contact their supplier about ways they can help.”

[Ends]

Notes to editors:

  1. Table: Number of electricity accounts with a consumer repaying an energy debt. Source: Ofgem data portal and Freedom of Information request (latest figures for 2019 and Q1/Q2/Q3 2020 in italics).
QuarterAccounts
Q1 20061,262,000
Q2 20061,304,000
Q3 20061,319,000
Q4 20061,208,000
Q1 20071,294,000
Q2 20071,341,000
Q3 20071,341,000
Q4 20071,293,000
Q1 20081,004,000
Q2 20081,025,000
Q3 2008980,000
Q4 2008952,000
Q1 20091,139,000
Q2 20091,173,000
Q3 20091,089,000
Q4 20091,006,000
Q1 2010910,000
Q2 2010989,000
Q3 2010953,000
Q4 2010854,000
Q1 2011866,000
Q2 2011921,000
Q3 2011870,000
Q4 2011779,000
Q1 2012799,000
Q2 2012940,000
Q3 2012930,000
Q4 2012901,000
Q1 2013982,000
Q2 20131,034,000
Q3 20131,046,000
Q4 20131,017,000
Q1 2014902,000
Q2 2014899,000
Q3 2014874,000
Q4 2014840,000
Q1 2015799,000
Q2 2015798,000
Q3 2015777,000
Q4 2015745,000
Q1 2016754,000
Q2 2016722,000
Q3 2016710,000
Q4 2016681,000
Q1 2017673,000
Q2 2017672,000
Q3 2017667,000
Q4 2017652,000
Q1 2018675,000
Q2 2018686,000
Q3 2018680,000
Q4 2018661,000
Q1 2019679,000
Q2 2019723,000
Q3 2019728,000
Q4 2019692,000
Q1 2020763,000
Q2 2020759,000
Q3 2020777,000
  1. Table: Price of the cheapest fixed energy tariff, and average price of the top ten cheapest fixed tariffs, per month November 2019 – November 2020. Source: energyhelpline.com analysis.
Nov-19Dec-19Jan-20Feb-20Mar-20Apr-20May-20Jun-20Jul-20Aug-20Sep-20Oct-20Nov-20
Cheapest deal£846£829£816£784£784£758£764£782£788£788£823£823£821
Average price of top 10 deals£877.80£879£853.00£823.50£817.80£788.70£796.70£806.60£823.80£828.50£859.10£856.30£851.40