Shock Proof: Breaking the cycle of winter energy crises

Shock Proof: Breaking the cycle of winter energy crises 3.67 MB

The need for energy bill support is urgent. New polling and Citizens Advice data shows the extent to which some consumers across Great Britain were struggling in the first weeks of winter:

• More than 3 million people have been disconnected from their energy in the last year because they could not afford to top up their prepay meter - including more than 1.4 million since November

• Over 5 million people live in homes with an energy debt, and are at greater risk as a result of actions to reduce costs, including turning off the heating or skipping meals

• 1 in 5 Citizens Advice debt clients have an energy debt, and it is now the most common debt we support people with. The average energy debt owed has increased to £1,835 by the end of 2023, up from £1,579 a year earlier.

The rest of winter looks set to be even worse, with prices rising 5% this month and colder weather seeing typical household energy usage reach its highest point. We estimate that over 2 million people will disconnect because they can’t afford to top up by the end of winter. The total energy debt pile has reached at least £2.9bn - and growing. This is weighing down millions of consumers and risks becoming unsustainable for the sector.

Some respite may be on the horizon, with prices predicted to fall somewhat from April - but this won’t be enough to fix the crisis. Bills will still be 40% higher than they were in 2021, while the end of extra support through the benefits system means many families on lower incomes will have less disposable income than they do currently. Meanwhile, wholesale prices remain volatile, and some changes in the energy system are likely to put upward pressure on bills in the coming years. We risk an annual winter crisis unless action is taken to help those struggling most.

Last year Citizens Advice looked at designs for new targeted support with energy bills that could work alongside energy efficiency improvements to lower bills sustainably. In this report we set out how these principles can be applied to the existing Warm Home Discount scheme to expand support to more low income households, at a level that is tailored to their energy needs. It also needs to be responsive to changes in energy prices so the scheme doesn’t fall behind when prices go up, or remain unchanged if prices go down.

Alongside this support, Ofgem and the Government should develop a joint action plan to support people in energy debt. This should include additional funding for independent debt support to help people find sustainable solutions based on their individual circumstances, and steps to ensure energy suppliers are doing right by their customers.