A new report by Ofgem, the gas and electricity market watchdog, has revealed that customers are building up £600 in accumulated debt before energy companies step in to help, with some suppliers even allowing £800 in electricity debt before they set up a repayment plan.
This is particularly concerning as over 2 million energy customers are now in debt, pointed out Mark Todd of energyhelpline.com, with average debt levels at £622 for gas and £628 for electivity, up 5% and 7% respectively from last year.
"The average low-income household is now teetering on the edge of fuel poverty, spending 9.7% of their salary on energy bills," said Mark. "Once at 10% a household is deemed fuel poor. Added to this, Ofgem figures show these households are the least likely to switch tariff, and so the most likely to pay top whack for their energy."
It's not all bad news, however, with the report finding that fewer customers were in debt to their supplier in 2016 compared to previous years, and that these vulnerable customers had lower levels of debt.
Additionally, only 210 customers were disconnected for debt last year, marking a 17% decrease from 2015 and continuing a long-term downward trend, with disconnections at a whopping 8,300 a decade ago. This shows that Ofgem's previous interventions have had a positive impact on the energy debt problem.
Now, Ofgem is taking these interventions even further to try and help even more customers. They will be extending the prepayment safeguard tariff to 1 million more households, which will help these households save an average of around £120 per year.
The report said: "Overall, our assessment shows that some progress has been made since our last report to improve outcomes for vulnerable consumers. Yet the experiences these consumers have continue to vary widely and we think suppliers can do more."
So, while progress is being made, there is certainly room for improvement in the way suppliers help customers who may be vulnerable to debt. The report particularly highlights that suppliers are still not doing enough to help customers access better deals, although it's hoped that the recently-announced energy price cap could go some way to helping, as it'll mean vulnerable customers won't have to pay extortionate prices for variable rate tariffs.
One of Ofgem's initiatives, which seeks to help customers switch away from prepayment providers, has seen the number of eligible customers rise fourfold, yet successful switches stand at just 5% - more customers need to be taking the plunge and switching to a better, and cheaper, energy deal.
If you're a frequent visitor to our site, you will know the importance of switching – both in making sure you are getting the most out of your financial products, and to keep you from overpaying for the services you rely on.
And indeed, the report reveals that prepayment customers could save up to £208 if they manage to switch to the cheapest energy tariff available. That's quite a saving, especially if you're already finding it hard to make ends meet.
Whether you're in debt, finding it hard to avoid debt, or merely preparing yourself for higher bills in winter, you could stand to benefit from comparing gas and electricity providers to see if you can find a better deal.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.