Covid pushes 600,000 more energy customers into debt

There has been a 40 per cent increase in the number of people behind on their energy bills, with 600,000 more currently in debt to their supplier than February, new research has found.

Citizens Advice’s latest report Recovery, or Ruin? has been collated from a range of sources, included two major surveys involving a representative sample of almost 10,000 consumers. The report explores how customer service impacts consumers and how vital it is to get it right during the pandemic.

The charity estimates that 2.1 million households are behind on their energy bills, 600,000 more than in February. This can lead to formal ‘arrears’ with a supplier, which happens if a bill is unpaid for three months or more.

Data collected by the charity from large and medium power suppliers indicates the size of debt is significant. In September the average amount owed by those who did not come to a repayment arrangement with their supplier was £760 for electricity and £605 for gas.

It further reveals a quarter of all energy customers (7 million households) worry they will not be able to pay this winter.

Alongside its latest report, Citizens Advice has published its quarterly star ratings table for customer service in which it grades suppliers on their performance.

Research found that one in seven people who tried to contact their supplier said they could not get through, call waiting times for two thirds of suppliers have increased and on average, suppliers are failing to respond to a third of customer emails within two working days.

Paying for energy

Due to restrictions, meter readers have sometimes struggled to attend properties, which has left some customers at risk of receiving more estimated bills.

More than 60 per cent of suppliers in the latest star rating results provided fewer accurate bills than a year ago.

Furthermore, the charity has seen some suppliers flout rules which protect customers from being billed for energy used more than a year ago.

Those consumers on prepayment meters (PPM) have become more at risk and since March 16 per cent have been unable to top-up because they could not afford to.

Engaging with suppliers

The report references how early on in the pandemic many suppliers made changes to how they operated and shifted to homeworking. Ofgem put in place ‘regulatory flexibility’, enabling suppliers to prioritise telephone services for customers in vulnerable circumstances, including people at risk of going off supply or struggling to pay. This period ended in June.

Yet research found that in the three months to September, one in seven people (14 per cent) who tried to contact their supplier were not able to. In more than half of cases (55 per cent) where contact was not possible, those surveyed said their supplier did not respond.

Digital services

Concerns were raised about a shift towards digital services, which the charity recognises as easy to use for many customers. However, it points to the fact that more than 9 million people in the UK struggle to use the internet without assistance.

With research forecasting that a quarter of the population will have very low digital engagement in 2030, the charity warns that changes by some suppliers may be causing difficulty for households reliant on telephone services.

For example, a third (32 per cent) who tried to get in touch with their supplier and could not said this was because they could not find their contact details.

As a result, Citizens Advice has called on Ofgem to update its stance on telephone services to set “clear expectations for suppliers” as they adopt more digital first approaches.

The report found that on the whole, the support that has been put in place by suppliers to help customers is working relatively well for those who have been able to access it. More than half (59 per cent) of people in financial difficulty who spoke to their supplier said the support options they were offered were helpful – just 16 per cent disagreed.

Yet between March and September only around six in 10 people (62 per cent) in payment difficulty had spoken to their supplier. Most of these had asked for help, with just 16 per cent being contacted by their supplier to offer help.

Citizens Advice is urging suppliers, Ofgem and the government to maintain and expand the existing support measures:

• Suppliers should ensure customers can get in touch quickly and easily, including by telephone
• Suppliers should continue to offer additional support agreed with BEIS through the duration of the pandemic, including payment holidays or temporary prepay credit
• Government should ensure there is adequate support for the hardest hit households this winter, through fuel vouchers or extra funding to support those people not covered by existing schemes like the Covid Winter Grant

Alistair Cromwell, acting chief executive of Citizens Advice, said: “The government and the energy industry have put in place significant measures to support people’s incomes and help those struggling with their bills. This has made a real difference to many, but this effort will be undermined if people can’t get through to their suppliers and access that support in the first place.

“We’re heading into the coldest months of the year and the full financial impacts of the pandemic are still to be felt. Maintaining high customer service standards is more critical than ever in order to make sure energy customers who get into difficulty can access the support they need.”

In response to the report, an Ofgem spokesperson said: “We have strengthened protections for consumers by making it a licence requirement for suppliers to put customers in debt on a realistic and appropriate repayment plan based on their ability to pay from yesterday [December 15]. Suppliers will also have to offer emergency credit to customers struggling to top up their PPM so they do not self-disconnect.

“We expect customers to be able to easily contact their supplier across a range of channels and we do not expect to see suppliers offering poor service or only dealing with emergency situations. We closely monitor and engage with energy suppliers and will take appropriate action over poor customer service where needed.”