What to do if you can’t pay your energy bill

We're thankfully seeing government action to reduce energy bills, but they're still a huge expense. The announcement that annual costs will fall by around £50 is welcome, but they have risen by 28% over the past three years, according to regulator Ofgem, putting a strain on millions of household budgets. The problem is particularly acute over the winter, when many people struggle to pay for the extra gas and electricity they use.

But what should you do if you can’t afford to pay your bill?

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Act quickly

If you receive a bill you cannot afford, or you are already in arrears, you should contact your energy supplier immediately. The company cannot disconnect your energy supply straight away. In fact, it has an obligation to offer advice, perhaps suggesting that you move to a cheaper tariff or a different payment method, such as a prepayment meter.

Payment plan

Your supplier should also help you to work out some sort of payment plan so that you can get back on track. You could, for example, pay a certain amount each week towards your debt, plus an amount to cover your current fuel consumption. A fortnightly or monthly plan is more appropriate in some cases. You might even be able to clear the debt on one go with your next bill.

The payment plan can be flexible but it must also be affordable and realistic. It’s therefore a good idea to draw up a budget with your incomings and outgoings before you agree to the plan to make sure you can meet the payments.

Prepayment meter

If you fall behind with the agreed payments, the energy supplier might install a prepayment meter. You would then pay for your energy upfront, rather like a pay-as-you-go mobile phone. You would also make a contribution to your arrears.

Prepayment meters can be a good way to control the amount you spend on your gas and electricity, but they are also usually one of the most expensive ways to pay for fuel. It’s a question of comparing other payment methods and weighing up the pros and cons.

Remember, you can still switch between suppliers if you are on a prepayment meter – you can compare prices and switch using our energy comparison service. You can also get information and switching advice from our team of experts on 0800 177 7861.

Fuel direct

People who receive certain benefits might be eligible for ‘fuel direct’. Here, the energy payments are taken directly from your benefit and the amount is fixed by the Department for Work and Pensions (DWP).

If you claim Income Support, Pension Credit, Employment and Support Allowance or income-based Jobseekers Allowance, you should talk to your supplier about fuel direct as it is usually a cheaper option than a pre-payment meter. For more information, get in touch with your local Jobcentre Plus.

Charitable trust

Some energy suppliers run charitable trust funds that can offer financial assistance to customers who are suffering severe hardship. The eligibility criteria vary, but it’s worth contacting your company to ask about any charitable funds. You should also make sure that you receive any government assistance to which you are entitled, such as the Winter Fuel Payment or the Cold Weather Payment.

The Warm Home Discount could help, too, depending on your circumstances – it’s worth £135 off your electricity bill.

Disconnecting the supply

If you fail to contact your supplier or you do not tackle the arrears, the company could call in a debt collection agency. And in the worst case scenario, you could be disconnected. However, disconnection is rare and the company must follow the correct procedure. For example, it must first send a disconnection notice giving you at least a seven-day warning.

Vulnerable households

Your energy company must not disconnect your supply between October and March if you are a pensioner living alone, live with other pensioners or live with children under the age of 18. The big energy suppliers have also agreed to do everything possible not to disconnect vulnerable customers, such as the sick or elderly, at any time of the year.

Switching back on

If your supply is disconnected, you will need to reach an agreement with the supplier about payments and reconnection. But be aware that the company could impose a reconnection fee, as well as administration charges. Failure to keep up with your energy payments could also affect your credit rating, making it more difficult for you to borrow money in the future.

You can read more about the government's plans to reduce bills - and the response of the energy companies - in this article.

Contact your provider

British Gas – 0800 107 3391

EDF – 0800 056 7777

EON – 0345 301 4875

Npower – 0808 172 6999

Scottish Power – 0800 027 0072

SSE – 0800 622 838

If you are not with one of the ‘big six’ providers listed above, you can find your supplier’s contact details on a recent bill or on its website.

Other sources of help

If you're struggling to afford your bills or are in debt, you may be able to get help and advice from your local Citizens Advice Bureau or a money advice agency such as StepChange, which offers free, impartial advice and debt management solutions.

* Up to 10% can save at least £244.64, MoneySupermarket data based on sales. June 2013

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