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Energy debt and energy bill arrears

The rise in energy prices over the last few years has been nerve-wracking for many people, across all walks of life. Because of this, understandably, you might have questions about energy debt. Most of us deal with energy bills in one way or another, but you might not know how energy debt works, or what happens if you fall behind on your bills.

Here at Lowell, we’re on a mission to make debt easier to understand. We know the world of finances can be unclear or confusing, and we want to increase awareness so that both our customers and the general public understand how finances can affect you.

With that said, let’s take a look at energy debt, what it means for you, and how you can get help and support with your energy bills if you’re struggling.

This content is intended to be an impartial guide regarding energy debt and energy bill arrears. Lowell Financial Ltd does not offer legal or financial advice. You can find out more about the organisations you can contact in our guide on debt help and support.

What is energy debt?

Energy debt is the term for when you owe money on an energy service, like gas or electricity. This might be because you’re struggling to pay your bills, or because you’ve moved house without realising you still had an outstanding balance to pay at your current address. 

Why energy debt matters

Energy debt like gas and electric bills are termed ‘priority debts’. Priority debts are called that because the consequences of not being able to settle them can be more serious than others, so being able to pay them is a high priority.

If you’re unable to pay your debt to your current supplier or keep up with a previously agreed plan, they might contact you about installing a prepayment meter instead. 

What to do if you’re struggling to pay your energy bills 

If you’ve missed payments on your energy bills, it’s important to get in touch with your supplier. Many energy suppliers will be able to help, especially if your circumstances have changed because of the cost-of-living crisis or because of coronavirus.

If you’re struggling to pay for energy in your home, there are a few different ways to get support with energy bills. The energy sector’s regulatory body, Ofgem, also has advice on what to do if you’re struggling with energy bills.

Talk to your energy supplier

Because of Ofgem’s rules, energy suppliers will always work with you to help you find a payment plan that you can afford.

Even if you think you may get into difficulty because of rising energy costs, your supplier will be able to help you to arrange a payment plan, so get in touch and see what support they can offer. For example, if you use a prepayment meter and can’t top up, you can ask for ‘emergency credit’.

They can also offer additional support, such as: 

  • Giving you more time to pay
  • A review of your payments and payment plans
  • Offering a payment break or a reduction in your payments
  • Advice on how to be more energy-efficient
  • Support on reducing your energy use 
  • Help you to access schemes and grants to help you afford energy costs

Priority Services Register

You might also want to, or be eligible to, join your supplier’s ‘Priority Services Register’. This means that your name will be on a list of customers who are entitled to extra help, such as:

  • Help with reading meters
  • Advanced notice of things like power cuts
  • Accessibility support for account information
  • Being able to nominate someone to deal with bills on your behalf

You can apply to join the register if your circumstances have recently changed – for example, if you’ve lost your job, been seriously ill or in hospital, or have suffered a bereavement. 

Speak to charities like Citizens Advice 

There are charities across England, Scotland, and Wales that can help offer support and advice if you’re struggling with your energy bills.

Here are a few charities that might be able to help: 

  • Citizens Advice can help you see if you’re eligible for any energy debt grants and benefits. If you use a prepayment meter, you might be able to get a fuel voucher from the Fuel Bank Foundation to add credit to your gas card or electricity key.
  • If you need support with energy debt and how to deal with it, StepChange can help offer free and impartial advice and support.
  • Charis are a grant administrator, helping to distribute essential funds and grants for different charities and authorities, and can give you more details about available grants.
  • If you’re living with a disability, then Scope can help by offering support in paying your energy bills and give you a hand when it comes to dealing with suppliers.  

Get help from the government

The UK government has created a range of energy debt grants and schemes to help people who are struggling with their energy bills.

These support schemes include:

  • Winter Fuel Payment: This is a payment, usually paid in November or December, of between £250 and £600, to help older people (born before 25th September 1957) to pay their heating bills.
  • Cold Weather Payment: If very cold weather is recorded in your area, and you receive certain benefits, you’ll automatically receive £25 for each 7-day period of very cold weather between November and March.
  • Warm Home Discount: This is a one-off £150 discount off your electricity bill, which is paid directly to your energy supplier.

If you’re concerned about energy debt specifically, then you can also apply for Breathing Space, also known as the Debt Respite Scheme. Read our guide to the Breathing Space scheme to find out how it can help you, and how it works for Lowell customers. 

Can you switch energy provider when in debt?

You cannot switch energy providers if you have been in debt to your current supplier for more than 28 days. Once you’ve settled your energy debt with your current supplier, you can move to a new supplier or a new tariff.

If you’ve been in debt for less than 28 days then you can switch to a new supplier, even if you still owe money to your old supplier.

However, if you have a prepayment meter, then you can still switch suppliers even if you owe your supplier up to £500 for gas and £500 for electricity.

How long can energy companies chase you for debt?

Energy companies have a responsibility to their customers, and they will always try to work with you to help you settle your energy debt and get back on your feet if you’re struggling.
 
If you’re worried about being chased for energy debt, then we have a dedicated guide to what happens if you ignore a debt collector that might be helpful. The long and short is that you should try to speak to your supplier (or to the company that owns your debt, like Lowell) instead of ignoring energy debt and hoping that it will be written off. If you speak to the company that owns your debt, they’ll often be able to help.

You might have heard of ‘Statute Barred Debt’ but this can be a complicated topic, and it’s worth understanding what it means in full and whether you could be potentially risking your financial situation by not speaking to your supplier.

That might mean helping you to find a payment plan that works for you, arranging a break in payments while you get back on your feet, or helping you look into options like a Debt Relief Order.

At Lowell, we want to help our customers and work together – get in touch with us so we can find the right path forward for you.

Whatever your circumstances are, we’re here to listen and support you however we can as you begin your journey to becoming debt-free with Lowell.

If you have any questions about working with Lowell, then take a look at the other helpful guides in our Debt Guidance hub, or get in touch with our friendly and supportive team.

First Published: 12th September, 2024