Why people in debt lose the energy to deal with energy companies

After reading the Daily Mail’s article about households turning to payday loans to top up their prepayment meters, here is more insight and examples about this issue.

At ClearDebt we deal with a variety of clients who have found themselves in debt for many different reasons.

Burning energyAfter reading today’s Daily Mail article about vulnerable households turning to payday loans to top up their prepayment meters, I wanted to share more insight and examples about this issue.

With years of industry knowledge and long lasting relationships with creditors across the financial spectrum we are able to offer these people a way out of trouble and lead them back to financial security.

An energy companies exception to the rule

Energy companies, however, refuse to allow customers to pay back what they can afford. Worse still, they are often forced into having a prepayment meter installed at their premises charging a higher rate per kwh and paying unreasonable sums of money back in debts before they even receive any credit for their gas or electric.

I recently spoke with a lady looking for my help with regards to her outrageous utility costs, after a quick discussion it was immediately apparent the debt level for her gas and electric owed to one of the big six energy suppliers would prevent her from switching to a cheaper provider.

The lady gave me access to her online account and we quickly established the figures just didn’t add up. Without hesitation, I put her into a three way call with her supplier.

After the obligatory 20 minute wait we got through to customer service agent.  I asked for the annual consumption of both her gas and electricity for 2013. After initially being informed “I wouldn’t know because we haven’t read the meter”, a claim the client strongly disputed as she had previously allowed them into her property to read both the gas and electric meters, the client service agent said they would attempt to manually work out her consumption as this was the best they could do.

It might not be 100% but it’s as close as we’ll get

She had allegedly used 4,375kwh of gas and 9,228kwh of electric. I immediately challenged him to as to why her online account gave a totally different reading; according to the supplier’s own online account she had used 1,977kwh of electric and 3,127kwh of gas.

The online system isn’t accurate

Now we had two completely different readings for her utilities, better still he then went onto correct himself and he now felt sure she had used 4,375kwh of gas.

Sorry I deducted something rather than added it

Very sketchy indeed I’m sure you’ll agree. I asked how yearly consumption of gas and electricity could be accurately worked out if meters hadn’t been read, after all you wouldn’t get to the checkout in your local supermarket and have your shopping bill estimated would you?

The client services agent offered no explanation, nor could he offer any answer as to whether Ofgem accepted such discrepancies between agent and online account, he seemed more concerned with getting us off the phone.

Prepayment meter debt

At the rate the debt was being collected via the prepayment meter we established it would take over 12 years to pay off the debt, effectively meaning the client would be held to buying her gas and electric from the supplier with no option to change to a cheaper provider.

Sadly, if they had allowed her to move to a cheaper provider she could have freed up an extra £500 a year to attack the debt level far quicker, this would be too easy though wouldn’t it?

We explained there was a vulnerable child with an extreme anxiety disorder which had led to Obsessive-Compulsive Disorder (OCD). If his routine is disturbed, especially regarding washing times, it made him extremely ill. The cost of heating the house and water was so high the lady was forced to go at least one week in every month without any gas at all, making her son ever increasingly anxious.

The client services agent and their manager could offer no solution to the problem. They claimed there was no such policy and his manager had informed him that the debt would remain on the meter and the client was already paying the lowest possible amount back. They did advise she could always apply for the warm home discount scheme.

When I asked how he thought that would affect a debt of £4,800, he rather disappointingly responded:

We didn’t run up the debt

This is just an isolated case but there are thousands more people out there suffering similar tales. It doesn’t stop at prepayment meter customers either, for instance if you have less than £500 debt, per fuel on a prepayment meter you can change supplier.

The debt stays on the meter and the next company allows you to pay it to them instead. If, however, you are a bill receiving customer you simply will not be allowed to change suppliers until your arrears are cleared.

Either that or you will face a final bill that you simply cannot afford to pay, forcing you to have a rethink and stay with your current supplier.

When hundreds of creditors will accept a customer’s financial situation and will agree on a set amount to be paid back via IVA’s or Debt Management Plans, what gives the energy companies the right to hold a gun to the head of the consumer?

Share your views below in the comments or join us on Twitter @ClearDebt.

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