Campaigners urge households to reclaim energy credit from suppliers in bid to 'reset' direct debit payments

Campaigners are urging households to reclaim credit they have built up with their energy supplier in order to “reset” direct debit payments that remain high as prices drop.

The Warm This Winter campaign, while stressing that customers should not cancel their direct debits as this could lead to higher unit costs being imposed on households, said early summer was the ideal time to reset energy payments for the year ahead.

Figures suggest UK energy suppliers are currently retaining more than £3bn worth of customer credit, with almost a third of UK households (32%) in credit all year.

Warm This Winter calculated that the combined bank interest likely to have been earned by firms from customer credit balances was at least £159m in 2023 alone.

Research by the campaign suggests that 38% of those in permanent credit live in households with low incomes, and who may have cut back on energy use or other essentials because their energy direct debits are too high.

It comes amid forecasts that the average household energy bill will fall by another 7% in July when the latest change to Ofgem’s price cap takes effect.

Energy consultants Cornwall Insight said they expect the typical household’s energy bill to fall from £1,690 a year currently to £1,574 on July 1.

This would be £500 less than the cap in July last year, when it was £2,074.

Martin Lewis, the founder and chairman of MoneySavingExpert.com, has also recently pointed out that while it is sensible to build up credit in the summer months to pay for higher energy use in the winter, May is the perfect time to stop the “rip off” of firms sitting on billions of pounds of customer credit.

Warm This Winter spokeswoman Fiona Waters said: “Energy companies are sitting on over £3bn of bill payers’ money whilst providing an appalling service in many cases and making billions in profits.

“The Big Energy Claim Back is a way people who pay by direct debit can issue a wake up call to companies that customers are not prepared to be ripped off anymore and demand energy suppliers provide a fit for purpose service, whether that’s smart meters that actually work, customer service centres that pick up the phone, fair tariffs, an end to extortionate exit fees and just basically doing their job.”

Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “It’s highly concerning that low income households may have been charged too much on their direct debits, leaving them to struggle to make ends meet during the cost of living crisis.

“With the huge sums being earned in interest by the energy firms, the least they can do is make sure that credit balances are not running too high, direct debits are set appropriately and the interest they have earned is either paid back to consumers or used to cancel energy debt of those most in need.

“Of course, customers should use caution when claiming back as their direct debits may be increased by their energy firm, but making sure a supplier has a regular meter reading is the best way to ensure accurate bills.”

Jan Shortt, general secretary of the National Pensioners Convention, said: “People have been struggling to pay their bills and it is shocking to learn that these bills may have been set far too high.

“Some energy suppliers will act and give credit back, most don’t so consumers need to know how to get their credit back.”

Energy UK deputy chief executive Dhara Vyas said: “Suppliers do aim to set direct debits at a level that means accounts are in balance after winter – when higher energy usage can cancel out the lesser amount used over summer.

“Such calculations are based on factors like previous consumption, so if there is a mild winter – as we have just had – and customers consequently use less energy than expected, that can lead to higher credit balances.

“It should also be stressed that while some suppliers have returned to profit this year, Ofgem has highlighted that they collectively lost £4bn in the previous four years and while the figures are not directly comparable, the amount of customer debt also currently stands at £3.2bn and remains a huge concern for the industry.”

Warm This Winter has launched a guide which includes advice and guidance on how consumers can claim back their credit.

The group has issued the following guidance for consumers:

Ensure your meter readings are up to date.
Check your energy bill or online account and see whether you are in credit or debit.
If you are in credit, contact your energy company to request it back.

The process varies from company to company but a guide to find out how to claim back credit from the major suppliers is available on the Warm This Winter website: https://www.warmthiswinter.org.uk/big-energy-credit-claim-back.

Before you take action, check that you are able to afford to pay more on monthly bills as energy firms may increase your direct debit if you withdraw your credit.

If your energy firm refuses to refund your credit, you can take up a case against them with the Energy Ombudsman: https://www.energyombudsman.org/