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Total number of Energy Bill payers in arrears climbs over 2 million, and Energy Suppliers criticised for poor customer service

Richard Simmonds • Dec 16, 2020

The Covid-19 pandemic has resulted in an extra 600,000 households failing to pay their energy bills according to a new report released by Citizens Advice taking the total number to over 2 million.

A surge in Energy Bill Defaults

Since February 2020, the number of consumers owing payments to their energy supplier soared as the Covid-19 pandemic and subsequent lockdowns led to a rise in redundancies.

The Citizens Advice report surveyed large and medium-sized energy suppliers in September and is the first to fully highlight the rise in the number of consumers struggling to pay their energy bill payers.

Impacts of Covid-19 lockdowns

As well as the grim economic situation the fact that so many people have been forced to work from home and consume more energy to stay warm and power computers etc. has put even more strain on bill payers. 


The report shows that on average, the consumers failing to pay their energy bills owe their supplier over £760 for electricity and £605 for gas. With such a high number of consumers struggling to pay their bills, energy suppliers have themselves come under financial strain.


The sharp rise in defaulted energy bill payments prompted Ofgem and the government to offer support to energy suppliers and consumers alike. Recently a large group of suppliers announced that they had signed up to more measures designed to offer more support to their most vulnerable customers.


Also read: Energy Suppliers join new Vulnerability Commitment

A growing number of prepayment customers struggling

The report also paints an increasingly grim picture for prepaid meter customers.


16% of prepaid meter customers were shown to have been unable to top up their meters since the start of the first lockdown in March.


That’s almost 700,000 households having to default on their payments due to financial challenges.


To help alleviate the strain on consumers, new rules that require energy suppliers to offer emergency credit to struggling prepayment meter customers. The new rules will be enforced by Ofgem and took effect on December 15th.


Also read: Prepayment Meter vs Direct Debit: Which is better?

Falling customer service standards

Citizens Advice is warning that the number of bill payers falling into arrears is likely to rise and that potentially 7 million households could struggle to pay their energy bills over the winter months.


“We’re heading into the coldest months of the year, and the full financial impacts of the pandemic are still to be felt,” said Alistair Cromwell.


The report also criticised energy suppliers and cited declining levels of customer service as a cause for concern.


Of particular criticism was how some suppliers treated their customers struggling to pay their bills. Standards were reported to have dropped as the suppliers themselves are forced to make cutbacks to stay afloat as a result in the rise of unpaid debt from customers.


Call waiting times for two-thirds of energy suppliers were shown to have increased, and suppliers were failing to respond to email inquiries within two days.


Those suppliers failing to provide adequate customer service could feel the wrath of the energy regulator.


“We have strong protections in place for consumers, and we expect customers to be able to contact their supplier across a range of channels easily. We closely monitor and engage with energy suppliers and will take appropriate action over poor customer service where needed” said an Ofgem spokesman.


Also read: How to improve consumer trust in energy suppliers

Worse to come?

Meanwhile, concerns are growing that the real financial impact of the Covid-19 crisis is yet to come.


According to some economists, there is typically a 2-year lag after a crisis before the accurate scale makes itself apparent.

Further Reading

Ofgem to introduce new rules to help customers struggling with energy bills- what does this mean for energy suppliers?


Energy White paper: Energy Billing to be shaken up by introducing automatic tariff switching


How should Energy Suppliers explain Energy Bill Increases?


Dyball Associates are proud to help new supply businesses successfully launch in the UK market.

 

Through our energy market consultancy services, and the software we’ve developed, we’re supporting new UK electricity and gas suppliers get set up and start supplying.

 

For more information on how to start and manage an energy company, get in touch with Dyball Associates today.

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