Rising energy bills pushing more people into debt

The number of consumers calling a national debt advice charity because they are struggling to pay their energy bills has almost trebled in the past four years.

National Debtline, a telephone-based service run by the Money Advice Trust, said it had seen a 181% increase in the number of calls it receives about fuel debt since 2007. Some 2,686 people called the service about gas and electricity debt in the first quarter of 2007. This rose to 7,544 in the first three months of this year.

The situation is likely to worsen after Centrica announced that wholesale gas prices for delivery over the winter months is likely to increase by 25%. The British Gas owner has yet to announce whether it will pass the cost onto consumers. The Bank of England warned earlier this week that energy prices across the board are set to rise by 15% for gas and 10% for electricity.

Energy prices have risen sharply over the past two years while consumers’ budgets have been stretched by high inflation and stagnant wages.

Joanna Elson, chief executive of the Money Advice Trust, said: “Fuel debts have now become a major part of our debt landscape and are one of the fastest growing problems we have witnessed at National Debtline.

“We have been working closely with several energy companies who have been keen to engage in the best ways to help their customers get back to a more healthy financial position.

“People also need the best information on how to deal with arrears for gas or electricity. Fuel debts should be treated as a priority debt as gas and electricity companies are free to cut off your supply within a few weeks if you don’t pay them.”

National Debtline advises anybody experiencing problems with energy debt to contact their supplier or a free advice agency to negotiate payment terms as soon as possible. Gas and electricity companies can cut off supplies without involving the courts.

“Individuals can contact their provider to arrange an affordable repayment plan, or use a pre-payment meter. Some fuel companies have set up trust funds that can sometimes pay fuel bills where customers are in financial difficulties,” Ms Elson said.

Source: www.totallymoney.com