Soaring fuel bills will plunge 2.6 million customers into debt by the end next year, forcing many low income families to decide whether to heat or eat this winter, according to new research.

The report, commissioned by the National Housing Federation (NHF), predicts 1.5 million electricity customers will be in the red with their power companies by next year - an increase of 150,000 in just one year.

And the number of gas customers in debt with their energy firms will hit 1.1 million by next year - up a further 140,000 on 2008 levels.

The research shows that by the end of next year one in ten of the British population will be in households affected by energy debt.

The NHF, which represents England's housing associations, fears many poorer customers will be forced to go without fuel because they simply won’t be able to afford to pay for it.

With annual electricity bills due to increase to over £500 per year, and gas bills to increase to around £900, by 2010, the report shows that the number of people struggling to pay their bills will increase to record levels.

-- Advertisement --

In 2005, the average energy bill per annum was £676. However, next year this is set to rocket to £1,406.

The news comes as the Government is set to unveil a package of measures designed to help families struggling to pay their energy bills.

The Federation believes that one of the key issues that exacerbates fuel poverty is the way the big energy companies charge people who pay for their gas and electricity via prepayment meters higher tariffs than other customers.

More than five million people pay for their energy via prepayment meters and although most of them come from low income backgrounds, the report shows that in 2010 the charges made to them will be up to £76 higher than those for quarterly billed customers.

NHF Director of Campaigns and Neighbourhoods Ruth Davison said: "The fact that 2.6m households are set to go into debt shows just how desperate the national energy crisis now is.

"The situation is now so serious that many households will simply have to choose between heating or eating. This will particularly affect households with prepayment meters as they already pay the highest charges for their gas and electricity.

"Clearly, the Government thinks that an energy efficiency drive is the answer to our problems, but while it is a good start ministers must summon up the courage to go much further.

"The time has now come for the Government to intervene and introduce tough regulation for the energy companies - as the deregulated market has clearly not delivered for many millions of hard-pressed families across the country.

"Ministers must regulate the energy companies to stop charging prepayment meter customers more than others, to put a cap on their charges, and to force them to use their massive profits to pay for their social and environmental responsibilities."

(CD/JM)