Energy debt reaches record high: How can you save money on bills?

The amount of money people owe to energy suppliers has risen to a record high.

According to Ofgem, total energy debt rose to £4.79bn between January and March.

That’s 5% higher than in the previous quarter.

Speak to your energy supplier if you’re struggling

The average debt for people with a debt repayment arrangement in place rose by 4% for electricity customers to £828.

Meanwhile, it went up by 4% for gas customers to £679.

By contrast, average arrears for people without a repayment plan were much higher - £1,876 for electricity and £1,623 for gas.

So it could be worth speaking to your energy supplier as soon as you're struggling to pay.

Your supplier might also be able to offer grants and advice on managing your account

Energy bills set to go up in July

The figures come just ahead of Ofgem’s energy price cap going up by 13% in July.

A household using a typical amount of gas and electricity will pay an average of £1,862 a year.

That’s an annual increase of £221, or about £18 a month.

The price cap applies to households on standard variable tariffs, which are the default tariffs for customers who haven’t switched to a fixed-rate deal. 

We should stress that while the cap limits how much suppliers can charge per unit of gas and electricity, it doesn’t cap your total bill.

The amount you pay still depends on how much energy you use.

Why we want a social tariff

When people under financial pressure, some will turn to credit to cover essential costs.

And that can ultimately compound their financial problems.

At the same time, many of the support mechanisms that exist are complex, inconsistent and hard to access.

That’s why Money Wellness are calling for a national social tariff that would automatically reduce bills for eligible households.

A targeted, automatic and consistent social tariff would not only be fairer, but also stop people falling into debt in the first place.

More than four in ten (42%) of the people we support come to us with gas and electricity arrears.

And based on our analysis, around 87% of these households could potentially meet common eligibility criteria for a social tariff, such as receiving means-tested benefits, disability benefits or experiencing financial hardship.

What else can I do if I’m worried about energy bills?

There are plenty of other practical steps you can take if you’re feeling under pressure.

See what benefits you can claim 

You might be entitled to some financial support to help with the cost of living.

Use our benefits calculator or give us a call to find out what you could claim.

It might be more than you think.

Ask for help with your debts

If you’re feeling weighed down by debt, get in touch for confidential, practical and impartial debt advice.

Try to save energy at home

Just a few small changes to how you use energy in the home could knock a few pounds off your energy bill, like turning lights off in empty rooms and taking shorter showers.

Check out our list of 50 smart energy-saving tips for more suggestions.

Create a household budget

Energy is just one essential cost that comes with running a household.

So make sure you know exactly how much money you’ve got coming in each month and where it’s going.

You’ll then be able to prioritise your spending and spot where you can save money.

Check our guide to creating a budget to find out more.