Energy bill debt has doubled among Britain’s poorest families over the past year, threatening mass defaults and a subsequent jump in prices, researchers have warned.
According to consultancy Baringa, the amount of unsecured debt owed to energy suppliers rose by 104% between late 2022 and 2023, from an average of £553 to £1,125.
This includes overdue payments on bills for which consumers are unable to agree repayment plans due to financial constraints.
“The money owed to energy companies is growing and becoming concentrated amongst the people least able to pay it,” Baringa partner Alasdair Dorrat commented.
“This results in terrible circumstances for households and knock-on effects for society when financially vulnerable customers default on their debts [and] the cost of their defaults is loaded on to other people’s bills.”
Overall, the proportion of those with energy bill debt reduced from 23% to 20% during 2023, Baringa noted.
However, as the total owed increased, this meant the most financially vulnerable people were becoming disproportionately affected.
According to Ofgem, energy debt had climbed to almost £3 billion at the end of last year, prompting proposals for charges to be added to bills to cover such costs for suppliers from April.
Baringa added the total value of bad debt owed to energy companies could double over the coming two to three years meanwhile, intensifying the need for such allowances in the regulator’s price cap.
“No one wins where debt is concerned, and therefore it’s vital that financial support is provided to break the spiral of debt we are seeing in the energy retail market,” Dorrat added.