Energy Firms Hoard £7 Billion Consumer Credit
Despite the energy and cost of living crises putting pressure on budgets across the UK, plenty of households are in credit with their energy supplier. Since April 2022, the amount that customers are in credit has risen dramatically, by £5 billion. Even though families and individuals have been looking to cut their energy use where possible, 16 million households haven’t used their credit throughout the winter.
Essentially, energy suppliers have stockpiled a collective £6.7 billion of customers’ money. Research from Uswitch has highlighted that 50% of those in credit have over £200. Where mild winter weather has lessened the need for heating, worry about the energy crisis has caused more consumer action. As a result, more credit has been put into the account instead of spent on heating.
Usually, it’s expected that credit is built up during the summer months and then used before the winter is out, when heating is needed. This year, however, because of the effects of tightened budgets on households, much more credit has been built up.
It’s believed that monthly payments have been set too high or haven’t been corrected properly, since a bump of £5 billion from last year is much higher than typical levels. As such, the total debt owed to energy companies has fallen from £1.2 billion to £920 million. Despite this, average debt has risen per household from £188 to £234.
According to the data, only 14% of the people surveyed intend to claim this credit back. With homes in Plymouth at an average balance of £603, this could prove to be a helpful amount to have with costs elsewhere. Anyone in credit with their energy supplier is entitled to claim their money back, although over 50% would rather leave themselves in credit to help with future energy bills.
The historical average of energy bills will be much lower than current levels, even though wholesale prices have fallen. The energy crisis has worsened energy bills, and they are expected to be at elevated rates for the rest of the decade. Thanks, in part, to Russia’s invasion of Ukraine, countries around the world have been scrambling for alternatives to Russian gas and oil, causing shortages and price hikes.
According to Eco Quote Today’s 2022 Home Energy Survey, only 3% of UK households weren’t worried about the energy crisis at all. Considering the amount of both debt and credit that have been racked up in the last year, it’s clear that this has been the case. With resources, such as the government’s Help for Households website, and financial help, from the Energy Bills Support Scheme, consumers have been more energy-conscious than ever before.
The energy regulator, Ofgem, has the power to order energy companies to ring-fence the credit they’re sitting on, but they have yet to do so. This would prevent them from being able to dip into these funds for use elsewhere. As more consumers are struggling with the effects of high inflation, it could increase public trust if the ring-fencing were to go ahead.