Hit hard by soaring energy costs UK consumers in their
droves have begun cancelling gas and electricity account direct
debits, warns services comparison and switching specialist
uSwitch.com.
Sparking the exodus was last year’s 42 percent increase in energy
prices which added on average £381 ($625) to consumers’ annual
energy bills. However, almost a third of households only had their
direct debits increased in the first quarter of 2009 leaving them
playing catch up to make up for months of under paying. Many felt
forced to cancel direct debits as a result, noted uSwitch.
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According to the Office of Gas & Electricity Markets, the power
supply regulator, some 40 percent of households pay energy bills by
direct debit.
However, based on data for the last quarter of 2008 and the first
and third quarters of 2009, uSwitch reports a 7.3 percent fall in
the number of households paying via direct debit with the number
paying by cheque or cash up 72 percent compared with 2008, from
275,400 to 474,300. Other more costly options than direct debit
such as prepaid meters have also seen a surge in adoption by
households.
Also indicating a trend away from direct debit, only 85.3 percent
of households choosing an alternative form of payment are opting
for direct debit compared with 92 percent a year ago. uSwitch
estimates this could mean that households opting for direct debit
could fall from 4.7 million in 2008 to 4.4 million in 2009.
The swing away from direct debit comes at a high cost, with uSwitch
calculating that cash or cheque customers are paying £98 a year
more on average for their energy than direct debit customers.
Direct debit customers who access energy suppliers’ cheapest plans
which are available via the internet enjoy even higher annual
savings of £214 on average compared with cheque and cash
payers.
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By GlobalDataThe average annual household energy bill for a standard direct
debit household is £1,141 while for an online direct debit
household the average is £1,025, according to uSwitch.
Overall uSwitch estimates that if the current trend in the use of
direct debit payments for energy bills continues UK households
stand to loose discounts totalling £33.5 million annually as a
result.
