The level of debt owed by domestic customers in arrears (who do not yet have a debt repayment arrangement set up) has generally risen since we started collecting data in Q1 2012 onwards. For gas, it peaked in Q1 2017 and has since fallen by 13 per cent. In electricity, after a couple of quarters of a downward trend, the level of debt increased again over the first three quarter of 2018 (i.e. by 8 per cent from Q4 2017 to Q3 2018), but has slightly fallen in Q4 2018.
The increase in the average debt is at least in part due to the continuing reductions in the total number of customers in debt, as this reduction is largely among customers with lower levels of debt. We will continue to monitor this closely.
Relevance and further information
There continues to be a seasonal pattern to energy debt. Debt generally falls towards the end of the year, when customers are billed for the warmer months. It then rises in the spring when customers fall into arrears following higher energy usage during the winter months. This seasonal trend is more pronounced with gas, most likely due to the importance of gas heating during winter.
A customer is in arrears if they have not paid a bill for longer than 91 days/13 weeks, and there is no formal arrangement to repay the debt. It excludes any costs for subsequent consumption. This will include customers who are billed in arrears for ongoing consumption, and direct debit customers who have fallen into debt by defaulting on one or more payments. It should exclude customers who have begun the transition to a formal debt repayment arrangement, but have not yet started repaying their debt.