‘Trapped' homeowners can't switch to cheaper energy tariffs

People looking to avoid energy price hikes by switching to cheaper deals could be trapped with their current supplier if they have defaulted on a payment and owe money, according to MoneyExpert.com.

The independent financial comparison website, owner of SimplySwitch.com, says some 726,000 people missed a gas or electricity bill in the last six months and warns that just as many could be trapped into expensive tariffs if they don't settle their bills.

Sean Gardner, founder of MoneyExpert.com, said: "Generally speaking if you have defaulted on a recent energy bill and still owe your supplier money, you will be tied into that contract until you pay up.

"With wholesale energy prices increasing, it's inevitable that gas and electricity prices will rise again, so we anticipate large numbers of people to look to switch to the most competitive deals once that process begins.

"However if you've missed a bill you won't have that luxury and could be hit with price hikes that you just can't avoid. The only way to release the shackles is to pay up and move on."

British Gas owner Centrica has warned it will have to increase prices to maintain profits, sparking speculation that an average household could face yearly fuel bills of more than £1,300.

The rules on switching provider state that any money a customer has not paid to a supplier becomes a 'debt' after 31 days. Suppliers are then allowed to stop their customers changing to another company until the 'debt' is repaid. Suppliers also have the choice to allow you to switch.

Suppliers can also cut the supply of the energy to the property if this ‘debt' is not paid or an arrangement is put in place to pay this over time (if you do go into an arrangement suppliers can prevent you from switching until this is paid).

And household budgets across the country are being squeezed to breaking point with millions of bills going unpaid. According to research by MoneyExpert.com, as many as 6.9 million bills went unpaid in the last half of 2007 and the website warns that many more people's finances could begin to feel the effects as energy prices begin to rise again and credit becomes increasingly hard to come by.

The website says people who are under strain from missing their bills should take action now or risk potentially damaging their credit rating.