Energy suppliers hoarding £400 credit from millions of bill payers - The Telegraph

Energy companies have been accused of hoarding customers' cash after research showed suppliers are sitting on more than £400 credit per household.

Providers owe a combined £6.7bn to 16 million households, a report by price comparison website Uswitch found. Experts said many suppliers had increased direct debits and as a result credit balances had soared by £5.3bn. The number of households overpaying their energy bill has risen by five million year-on-year.

Uswitch found that Plymouth had the highest energy credit among UK cities, with the average household owed £603. This was followed by Brighton on £464 and Sheffield with average credit of £441. The average amount owed was £411.

As payments to suppliers have increased, the number of households in debt has fallen from six million to four million. The total amount of debt owed also dropped from £1.2bn to £920m.

Richard Neudegg of Uswitch said: “Normally we’d expect to see people exit winter with little or no credit balances, but a substantial number of households have weathered the storm, leaving suppliers sitting on nearly £7bn.”

The findings raised questions over whether direct debits set by suppliers in reaction to the energy price rises were “much higher than they needed to be”, Mr Neudegg said.

Cities where customers are most in credit

An investigation by The Telegraph carried out last year found that suppliers were increasing direct debits even when the household was significantly in credit.

Ofgem has been looking into ways to better protect customers’ credit balances since 2018, however, it has dropped proposals to automatically refund credit at the end of the contract year and to limit the amount of credit companies can hold.

It also shelved plans to ringfence customers’ credit balances to stop them from being used like an “interest-free company credit card”.

Uswitch is urging consumers to check their credit balance and consider asking for a refund after discovering that half of households (54pc) do not know how to reclaim credit from their provider.

How can I claim my money back?

Bill payers should check their account balance online or over the phone to work out if they are in credit, experts said.

A supplier may automatically refund any money owed at the end of the year, or reduce a customer’s future direct debit payments.

But if they do not, then customers should consider claiming back the credit. To do this, they will need to contact their supplier and say how much credit they would like refunded.

Customers will generally be asked to give an up-to-date meter reading.

They may not refund customers who only have a small amount of credit during the summer, as these customers are likely to use up the credit when bills are higher during the autumn and winter. If suppliers turn down a refund, they must give a reason for doing so.

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2023-04-26 05:00:00Z
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