What happens when you can’t pay an electricity or gas bill?

Despite having an economy that is essentially close to full employment, Ireland has a big arrears problem.Hundreds of thousands of households are behind on their electricity and gas bills – and the number has been growing.According to the latest figures from the Commission for Regulation of Utilities (CRU), 328,273 are in electricity arrears, while 188,941 are in gas arrears. A large proportion of these were more than 90 days behind on payment last month.The situation has been worsening for several years, exacerbated by price increases. The Russian invasion of Ukraine, followed by the US and the Israeli assault on Iran, has driven up the wholesale cost of energy and fuel.READ MOREMitchell O’Brien, a personal insolvency practitioner, sees the strain on households from rising prices.“I’m 58 years of age and through thick and thin the electricity bill would always have been a number one priority,” he says. “Could you imagine coming home to a house where the electric has been shut off?“When I see that half a million households are in arrears – of which there are only two million in total – the question that arises for me is: ‘If someone can’t afford those bills, what else can’t they pay?’ “This is for me one of the real bellwether indicators of where ‘middle Ireland’ is. Or where 25 per cent of the households in the country are at.”So far this year, Electric Ireland, Yuno Energy and PrepayPower have all increased their prices. And more increases are coming. Industry observers are keeping an eye on Flogas at the moment, which has yet to make an announcement.“[Bills] are likely to creep higher over the coming months as we move into winter when energy demand and bills typically increase,” says Daragh Cassidy of the switching website Bonkers.ie.“On top of this, households have to contend with new price hikes from several energy suppliers which kick in from next month.”Cassidy says it will prove difficult for households in heavy arrears to switch to another provider in order to get lower prices – but there are things they can do. “Anyone struggling with their energy bills should reach out to their supplier first and foremost,” he says. “All should have concrete plans and support structures in place to help those most in need and some have even set up hardship funds. Support and advice can also be sought from the likes of Mabs [the Money Advice and Budgeting Service] and the Society of Saint Vincent de Paul.”[ Surging energy prices set to exert further pressure on GovernmentOpens in new window ]With the budget for next year due to be unveiled in under two weeks, much of the political focus of late has been on how to grapple with the continued high cost of utility bills.Minister for Finance Simon Harris has said there will be a range of cost-of-living measures. Sinn Féin has called for a targeted €400 energy credit, while the Social Democrats are demanding a windfall tax that would hit the “super-profits” and “immoral profiteering” of the energy providers.But what happens when somebody simply cannot pay their bills – and how can the overall arrears situation be resolved?According to Cork-based personal insolvency practitioner Alan McGee, severe punitive action is unlikely in the vast majority of cases.“Nobody has come in to me with legal proceedings, where they are being pursued by the ESB or Bord Gáis or Electric Ireland – and I don’t see it from the court lists either,” says McGee.“The threat of cutting someone off is rare enough as well. Energy providers are wary of taking draconian steps like that.”Instead, McGee says providers are generally willing to engage with customers – and find a way of making payment easier in the future. One of the main arrangements put in place with account holders involves a switch to prepaid options, such as an old-fashioned electricity meter where money is put in before the electricity is used.For example, Electric Ireland, the country’s largest provider, says it has a “compassionate assistance fund” that offers energy cost education and a pay-as-you-go option. It says it engages with customers on flexible payment plans.“I haven’t seen any examples of people refusing to pay who have the ability to do so,” says McGee.“If you have people who are just in difficulty on their day-to-day utility bills, a lot of them will go to the Mabs, or the likes of that, and get assistance on managing their financial affairs. “If Mabs assessed that they did have ability to pay – they would give them short shrift.”[ Cost of living is top priority for voters ahead of Budget 2027, Irish Times poll findsOpens in new window ]In many cases, says the insolvency practitioner, utility debt is part of a wider problem. For some, a debt relief notice – which covers unsecured debts up to €35,000 – might be suitable.This bundles together various different unpaid bills and can include things like credit union loans and credit card debt.“It doesn’t cost anything to do that and it gives them a chance to do a reset,” he says. “They could clear those arrears and set themselves up with prepay meters going forward.“The arrears issue has to be tackled – you can’t go on building the debt levels. Invariably people don’t have the money to clear those arrears and there needs to be some level of forbearance or forgiveness.”The CRU says the average arrears on an electricity bill is €512, while gas arrears average €224, which amount to respective increases on 2022 of 65 per cent and 45 per cent. The problem has grown despite a cut to the VAT rate on energy from 13.5 per cent to 9 per cent in 2022.Mitchell O’Brien says the Government, along with the energy regulator, has worked to mitigate the possibility of large-scale disconnections, but many people are suffering in silence.“There’s probably quite a few people living without power,” he says. “But it would be happening so quietly as the households would be mortified if anyone knew”.[ The two things that make Ireland expensive: Energy and housingOpens in new window ]O’Brien highlights two trends that point to more challenging economic territory ahead. He refers to the mortgage arrears figures from the Central Bank for the second quarter. While the overall amount of mortgages in arrears has fallen over recent years – the latest numbers showed 12,000 had fallen into “early arrears”, meaning arrears of less than 90 days. On top of this, O’Brien cites the loss of about 35,000 jobs in the Irish tech sector.The fact that many mortgages are still lapsing into arrears, he says, is “significant at a time when the general narrative is that the country is booming – and we’ve never been collecting more tax”.“But if you look at the narrative around the Government’s preparation for the budget – three to six months ago it was all about cutting inheritance tax and reducing income tax,” he says. “Now it is all about energy credits and energy-related costs and reliefs around them.”The best thing that people can do, says O’Brien, is make contact with insolvency practitioners or Mabs as soon as possible.“Time after time when people present [with their issues], they present too late,” he says. “They present after they have exhausted their parents’ support. Irish parents are great like that, but they can’t go on forever. “The earlier someone reaches out for advice the better it will be for them and their loved ones.”