Energy giants are hoarding £4.5 billion of THEIR cash. Here’s how to get it back
An energy crisis grips the nation. But as households feel the squeeze, gas and electricity providers are demanding more cash than they need and are sitting on a £4.5bn pile of customer loans – up from £1.4bn last spring.
Two thirds of all households have a loan from their energy supplier. Companies have doubled the amount they keep as a buffer this year, to an average of £249, according to comparison website Uswitch. For many households, the loan adds up to more than £1,000.
The reason for this imbalance is that more than half of all households now pay their energy bills by direct debit, as this is a convenient payment method. While it offers a simple solution to ensure bills are paid automatically every month, it also benefits energy providers, as they can withdraw more money than is spent on energy consumption.
Strict capital adequacy requirements being introduced by energy regulator Ofgem to protect against future energy company bankruptcies are also expected to see direct debit demands rise even further from April – when the average government energy price guarantee is raised by £2,500 up to £3,000 per year.
As households feel the squeeze, gas and electricity providers are demanding more cash than they need and are sitting on a £4.5bn pile of customer loans – up from £1.4bn last spring
The consumer gets his credit back whenever his gas or electricity supplier collapses. An Ofgem spokesman says: “Consumer protection is at the heart of our regulations and consumers can always ask for excess balances to be returned to them where suppliers owe them money.”
KEEP AN EYE ON THESE STATEMENTS
Utilities wasted no time increasing direct debits in response to Russia’s invasion of Ukraine — with energy costs rising 54 percent last spring.
Ofgem found that customers with a standard variable tariff saw energy bills skyrocket even further – by 62 per cent between February and April – to cover these rising costs. Half a million people received direct debit increases of more than 100 percent.
The regulator said suppliers like Ecotricity, Good Energy, Green Energy UK and Utilita Energy were among the worst offenders – and were urged to recalculate the math behind their direct debit increases. Others including Bulb, Eon, Octopus Energy, Outfox the Market, Ovo Energy, Shell and Utility Warehouse have also been criticized for increasing demand.
If you’re a customer of one of these gas and electric companies — or others — check payment increases against bank statements and request a reduction in debits each month as you build credit.
Remember that direct debits are made to allow customers to build up credit during the warm summer months when gas and electricity usage is lower and this helps offset against the colder winter when usage is higher. If energy dependency is nearing its peak, now is a good time to check that consumption is in line with bills.
Check gas and electric utility payment increases against bank statements, and request a reduction in direct debits each month as you build credit
DON’T BE AFRAID TO CLAIM YOUR CREDIT BACK
Contact your utility by phone, email or web ‘live chat’ to claim your money back with a current meter reading. Vendors typically review accounts each year using meter readings and can automatically refund balances. Don’t let that stop you from accessing any credits first – it’s your money and the annual review isn’t a valid reason for suppliers to rip you off and not pay you back.
But be aware that there may be a “buffer” in the form of credit that needs to be left behind – so you don’t leave the supplier with nothing. For example, British Gas is asking for a £75 loan as a buffer against future energy bills.
The £400 subsidy paid to households by the Government in the autumn for the ‘Energy Bills Support Scheme’ is also not included in calculations of supplier debit payments. If a utility denies a request, ask for a full explanation of how they can justify it. Make a formal complaint to the company to get your money back if you’re still not satisfied – before contacting an ombudsman.
Emily Seymour, energy expert at which?, says: “We’ve heard stories from consumers where energy debits have been miscalculated. Start any complaint with your energy company before escalating it further.’
The Energy Ombudsman can be contacted eight weeks after you have lodged a complaint with your energy supplier and it has not been satisfactorily resolved. Contact ombudsman-services.org or call 0330 440 1624.
Contact your utility by phone, email or web ‘live chat’ to claim your money back with a current meter reading
TELL YOUR SUPPLIER YOU WANT TO LEAVE
If you think your energy company is taking more than it should and is finding excuses not to pay, another option is to let them know you want to leave.
Unfortunately, the cost of living crisis means there aren’t great energy deals – the energy price cap keeps average household bills at £2,500 – but you’re not paying more money either if you decide to move elsewhere.
Your gas and electricity supplier must issue a final bill within six weeks of switching to another provider – and pay the remaining balance to your account within ten working days.
If the original supplier fails to pay the money owed by that time, Ofgem says they will have to pay you an additional £30 in compensation.
Comparison sites like MoneySuperMarket and Uswitch can offer options on which new provider you could switch to if you provide details of your most recent utility bill and zip code.
The whole process usually takes 21 days, including a 14-day cooling off period after signing up. You will not notice any disruption to your gas and electricity supplies.
Before you take the plunge, it’s important to make sure you’re not signing up for a lengthy contract with an exit fee if you want to escape early. If that’s the case, the best advice is usually to save money by staying there.
If you think your energy company is taking more than it should and is finding excuses not to pay, another option is to let them know you want to leave
BUT HAVING A HEALTHY BALANCE CAN PAY OFF
Before the energy crisis, some providers would incentivize customers to have credit by offering interest on the money stolen.
That rarely happens today, but the exception is Ovo, which still pays three per cent interest on balances up to £1,000 in the first year – to four per cent in the second year and five per cent from the third year onwards.
This is a competitive savings rate that you’d be hard pressed to beat anywhere else, so it might be worth using as a savings account to withdraw later.
Another reason you can allow energy companies to withhold money is if you expect much worse bills in the future. A government energy price guarantee averaging £2,500 a year increases to £3,000 in April. Although household electricity bills remain capped at that amount, suppliers can ask for hikes to £4,279 for the annual price cap in January. Households shouldn’t see this increase on their energy bills, but the taxpayer still ends up footing the bill because the difference between the price guarantee and the cap imposed by suppliers is paid by the government.
Which one? Energy expert Emily Seymour said: “Providers need to be able to justify why a customer’s direct debit payments are being priced at this level. This could be because they assume you’ll use up your credit in the winter, when homes typically use more energy. We recommend building up sufficient credit over the summer.
“If you don’t think you will use enough energy to justify how much credit has accumulated in your account, contact your energy supplier and ask them to explain why your payments have been set at this level. “
https://www.dailymail.co.uk/news/article-11609923/Energy-giants-hoarding-4-5-billion-cash-back.html?ns_mchannel=rss&ns_campaign=1490&ito=1490 Energy giants are hoarding £4.5 billion of THEIR cash. Here’s how to get it back