With household energy costs still almost double pre-crisis levels, and significant inflationary and interest rate pressures on their essential outgoings, customers’ energy debt is going to continue rising quickly.
Citizens Advice estimates UK households are behind on bills by £22 billion but warns that the number could be much higher, with energy debts and council tax arrears now the most encountered debt types. Citizens Advice data shows during the first four months of 2023, the number of people seeking support with energy bills increased by 112% compared to the same period in 2020.
Ofgem’s most recent data shows that customer debt and arrears in energy is now around £2.6 billion. This is double the level at the start of 2020, and as the debt increases, a greater proportion will be unpaid.
Energy suppliers already provide a significant amount of discretionary support to customers, including payment plans and repayment holidays, but also direct financial support.
However, the affordability crisis means that even with this support many customers will still struggle to pay for their energy, contributing to rising debt levels across the industry. This growing financial deficit is becoming unsustainable; even with the provision of an additional debt allowance from Ofgem the scale of the shortfall is significant.
The Winter 2023 Voluntary Debt Commitment for domestic energy suppliers is a combination of good practice and crisis measures for the concerning position customers are in for winter 2023.
Developed with Citizens Advice, Energy UK and Ofgem, these new commitments set out additional actions energy suppliers will take, above regulatory obligations, to support customers in payment difficulty. This includes a commitment to fund customer support beyond licence conditions and to target it effectively to have the maximum benefit. In order to target the funding to help those most in need, each supplier, with their different customer bases, is best placed to determine how they best meet their obligations and utilise these voluntary initiatives to support their customers.
Prepayment meters are a useful tool to help customers manage debt, and customers on smart prepayment meters can receive additional support more quickly and effectively than if they were on legacy meters. Alongside the Winter 2023 Voluntary Debt Commitment, there is a clear need to provide simple information to support customers in debt, and encourage their engagement with charities, debt advisors and energy suppliers to seek advice and support. Citizens Advice and Energy UK have developed common messaging to inform people what they should do if they are falling behind on energy bills. This industry-wide campaign will be supported by energy suppliers, Ofgem, and the Government to ensure consistent, clear messaging and advice for customers, and it is hoped the messages will be shared widely by charities and other consumer groups
Winter 2023 Voluntary Debt Commitment
These commitments have been made by the following suppliers: British Gas, E, Ecotricity, EDF Energy, E.ON Next, Good Energy, Octopus, Ovo, Rebel Energy, Shell Energy Retail Limited, Scottish Power, So Energy, Utilita, Utility Warehouse.
1. Energy Suppliers are taking additional steps to ensure customers in debt are treated fairly at all times.
- Suppliers are reviewing and where necessary updating their staff training and debt communications in pursuit of best practice for their customers, including delivering frontline training on working with customer referrals from external organisations.
- Suppliers will fully consider information (including budgets, affordable payment offers and prepared Standard Financial Statements) and third-party authority forms from a customer’s chosen credible debt or consumer body organisations, including FCA-authorised debt advisors.
- Suppliers proactively identify and support customers struggling to pay their bills and ensure repayment plans reflect ability to pay (include the use of payment holidays where appropriate).
- Policies for the use of High Court enforcement and County Court Judgements (CCJs) for debt will be signed off at board level or equivalent.
- Energy suppliers signed up to the Energy UK Vulnerability Commitment (covering 95% of the market) only use High Court Enforcement Officers to recover debts where appropriate for a vulnerable customer, taking consideration of any wider vulnerabilities that may be exacerbated by Court enforcement action.
- Energy suppliers have set up partnerships with charities and debt advice organisations to help provide signposting and additional advice for vulnerable customers who are in arrears.
2. Energy suppliers are offering financial assistance to those most in need.
- They are set out in detail on the Energy UK website for each supplier and cover a range of support areas which may include:
- Enhanced debt write-off schemes and hardship funds;
- Enhanced funding to charity partners and frontline organisations;
- Reducing or waiving the standing charges over winter for certain customers.
- As part of the Energy UK Vulnerability Commitment 95% of suppliers have appointed a Vulnerability Champion, at board level or equivalent, supporting the sign-off of additional support funds, as well as additional funding dedicated to increasing resources on dedicated support teams to support customers in arrears.
3. Energy suppliers are helping customers achieve lower bills
- Alongside delivering Government energy efficiency schemes, some suppliers offer support to households to monitor and improve energy efficiency and provision of replacement home devices through schemes that are beyond their obligations as a supplier.
- Energy suppliers are taking innovative steps to improve their ability to target and offer support measures effectively through working with a range of local authorities, charities and other partners.
- Domestic energy suppliers representing 75% of the energy market signed up to the demand flexibility service that enables customers to be paid for using less energy at peak times and commit to bringing the benefits of flexibility to more customers than ever this winter.
4. Energy suppliers are taking additional steps to ensure bills are accurate
- Suppliers are continually improving the ease for customers to give meter readings manually where necessary, in person where necessary or via communication channels (phone, apps or online). Adapting to the changing needs of their customers.
- Suppliers are training service staff to ensure accurate billing.
- Some energy suppliers are capturing consumer interest in smart meters by trialling and innovating their tariffs and flexibility products, while also tailoring their contact and engagement to their customers. This is supporting an increased rate of smart meter installations, despite the significant challenges of reaching every household. Millions more customers will be able to use smart meters this winter. Removing legacy meters improves the accuracy of billing and suppliers’ ability to support customers quicker and more effectively.
- Some suppliers are integrating smart meter data into their systems, to help identify vulnerability, to support customers and to help them better manage their bills.
5. Energy Suppliers are committed to supporting, through appropriate communication channels with customers, a national communications campaign, which will:
- Encourage consumers to contact their energy supplier to disclose any vulnerability;
- Highlight the role of the advice sector in supporting people to secure an affordable debt repayment plan; and
- Ensure households are made aware of further support available, including energy efficiency.
The Winter 2023 Voluntary Debt Commitment will be in place from October 2023 until March 2024.
Speak. Seek. Save. campaign messaging
If you’re behind on your energy bills you should:
Speak to your energy supplier
- Your supplier has to help you and negotiate a payment plan that works for both of you
- When making a payment plan your supplier has to take into account how much you can afford to pay and how much energy you’ll use in future. You’ll pay in fixed amounts towards the debt you owe over a set period of time
- Get help from the Citizens Advice consumer service if you can’t come to an agreement with your supplier about repaying your debt
Seek advice on managing debt
- Get advice from a charity or organisation to help you manage your debt
- Energy bill debt is classed as a priority debt so you should get advice as soon as you can
- A debt charity will help you with long-term strategies to reduce debt
- Not all debt advice is trustworthy. Use the StepChange checklist to make sure you’re getting advice you can trust
Save energy by making sure your home is energy efficient
- There are simple changes you can make around your home to be more energy efficient, such as checking your central heating controls or using your appliances differently
- You might also be able to get help towards the cost of making bigger energy efficiency changes around your home such as getting a new heating system
- You should make sure you keep your home warm enough so there’s less risk of your home becoming damp and you getting ill and make sure you keep essential appliances such as your fridge switched on
Useful links for customers
- National providers of free debt advice include Citizens Advice, StepChange and the National Debtline
- If you are in Scotland, Advice Direct Scotland provides free and practical advice
- Citizens Advice consumer service
- Citizens Advice energy advice
- Get help towards the cost of energy efficiency
- StepChange checklist for debt advice
- Find ways to save energy in your home
- The National Debtline
Additional Information: Energy Supplier Obligations and relevant bill support and debt schemes
Set out below are the obligations relevant to a customer’s financial support and debt journey. For a more detailed overview of consumer advice please see this guide produced by Ofgem, Energy UK and Citizens Advice.
You should always contact your energy supplier to discuss your circumstances. Your supplier must consider your circumstances and situation and offer help.
For any debt you owe, your supplier must work with you to agree on a payment plan you can afford based on what is called your ‘ability to pay’. They must clearly communicate how much you will regularly repay, how the repayment will be deducted, when the debt will be repaid and what to do if you experience difficulties during the debt repayment arrangement.
You can ask for:
- A review of your payments and debt repayments.
- Payment breaks (if available) or reductions.
- More time to pay.
If you’re running out of gas and electricity, your supplier provides an emergency credit facility which you can access automatically via your meter. If this is still insufficient, then you can call your supplier and explain the situation as they are required to fully consider the provision of additional support credit to keep you on supply or return you to supply where appropriate.
This can be if you are struggling to pay (Emergency credit), because your top-up points are closed (Friendly-hours credit on smart meters) or because you are in a vulnerable situation (Additional Support Credit).
In most cases any temporary credit will have to be paid back when you next top up, though you can ask your supplier to spread out the cost in a payment plan, based on what you can afford to pay.
Energy supplier schemes and grants
You might be able to get help for energy-saving improvements through the Energy Company Obligation (ECO) if your home has an Energy Performance Certificate (EPC) rating of D or below and if you claim certain benefits and live in private housing (for example you own your home or rent from a private landlord) or you live in social housing. Contact your supplier or your local authority to find out more.
Alongside ECO, is the Great British Insulation Scheme (GBIS) focused on insulation measures. As well as supporting low-income and vulnerable households, it will also be available to those living in homes with an Energy Performance Certificate rating of D-G, and within Council Tax bands A-D in England and A-E in Scotland and Wales. The suppliers that will provide this service are listed here.
Warm Home Discount
You may be able to get £150 off your energy bill (or added to your meter). You can check your eligibility online here. You must be named on the electricity account or bill of a participating energy supplier and meet the eligibility requirements.
Nearly all suppliers are required by Government to offer the Warm Home Discount. You no longer need to apply to your energy supplier for the Warm Home Discount in England and Wales, while in Scotland you will still need to apply. Suppliers usually pay out over the winter months.
Breathing Space (sometimes called the ‘Debt Respite Scheme’)
A free government scheme in England and Wales that could give you up to 60 days’ space from creditors to focus on getting debt advice and setting up a debt solution. You can only apply Breathing Space through a debt adviser. If you apply and are eligible, all creditors are informed and must stop any collection or enforcement activity. You’ll still need to keep making your regular payments if you can afford to. Breathing space can only be started by:
- A debt advice provider who is authorised by the Financial Conduct Authority (FCA) to offer debt counselling.
- A local authority where they provide debt advice to residents.
 Citizens Advice (2023) One in four people behind on at least one bill, as UK households fall £22 billion in the red
 Ofgem defines “Debt” = repayment plan in place, “Arrears” = no repayment plan in place