1 month ago
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Millions of households are sitting on a pile of energy credit, totalling £3billion, according to new research.
Uswitch says the average customer has accumulated nearly £200 in surplus credit.
Around 15 million households still hold a credit on their energy account despite winter ending.
It’s normal for customers to build up energy credit during the warmer months, as it helps cover higher energy use during the colder winter months.
This happens because monthly direct debits are usually calculated by your energy company.
They estimate your energy costs for the year and divide the total into 12 equal monthly payments.
However, around 15 million households still hold a credit on their energy account despite winter ending.
Uswitch’s findings reveal that households on fixed energy deals are more likely to be in credit (63%) compared to those on standard variable tariffs (51%).
Furthermore, 11% of consumers have credit balances exceeding £300, and 4% have over £500.
Despite these substantial sums, only 31% plan to request a refund.
The research also highlights regional variations in credit balances. Edinburgh tops the list with an average credit of £224 per household, while Belfast lags behind at just £127.
Martin Lewis, founder of MoneySavingExpert.com, issued a warning last week, advising customers with more than six weeks’ worth of energy credit to consider requesting a refund from their supplier.
Elise Melville, energy expert at Uswitch.com, said: “More than half of UK households are coming out of the coldest time of year with credit on their accounts.
“During the energy crisis we advised households to leave energy credit with their supplier to protect against rocketing prices.
“However, with the price cap coming down from those highs of the energy crisis, consumers with excessive credit may want to consider reclaiming some of it.
“If you have a high credit balance, you may want to ask your supplier to check that your direct debit is set at the right level for the amount of energy you use.”
Requesting a refund from your supplier is easy.
How do energy direct debits work?
THERE are two main types of energy direct debits - fixed and variable.
Most energy customers pay a fixed direct debit, which means you pay a fixed amount every month.
Your energy company will work out the cost of your energy for the year ahead and divide this into equal payments.
Most energy firms will use the average amount of gas and electricity used in previous years to calculate your monthly instalments.
With a fixed direct debit you can spread the cost of your energy use without any surprises.
If your energy supplier has upped your fixed direct debit amount even though your usage is down, you can request that the fixed monthly charge is brought down – we’ve explained how to challenge your bill below.
Those on fixed direct debits are more likely to build up credit during the warmer summer months and if you’re in credit but your direct debit has risen substantially this winter it’s worth challenging it.
Some energy companies give customers the option to pay with a variable direct debit.
With a variable direct debit, you can choose to pay a varying amount every month or every quarter, depending on the energy you use.
You’ll pay for the energy you use, this means you’ll likely pay more in the winter and less in the summer.
Some experts argue that this type of direct debit method makes it harder for households to budget in the colder months but if you only want to pay for what you use each month then a variable direct debit may be a safe bet.
How do I request a credit refund?
First, make sure your energy firm has the most up-to-date meter reading.
If your reading doesn’t match the energy use they have down for you, chances are they’ll want to update your monthly bills as you may not be paying the right amount anyway.
But if your meter readings are up-to-date and f you’ve been in credit for more than one month ask your energy firm to return the funds.
Each energy supplier has its own process for customers wishing to get a credit refund.
For example, British Gas rules state that it will always hold a £75 energy credit on live accounts.
The supplier will only refund you if there’s £5 or more left over after it’s put a £75 credit towards your bill.
Customers can request a refund by logging into their online account.
Ovo Energy customers can request a refund if their credit is at least £25 higher than one month’s direct debit.
After submitting a meter reading to your online account, customers should head to the payments page and click apply for a refund.
Check with your energy provider to find out how to request your money back.
We’ve previously explained the rules for each energy supplier – so check exactly how you can request a refund.
If your supplier won’t offer a refund or you think that your direct debit is set too high, you can also challenge your bill.
How can I challenge my bill?
BEFORE you dispute your bill it's worth using an energy calculator to work out exactly how much your usage costs on paper.
You also need to be aware of your rights.
If you pay by direct debit, then this monthly amount should be “fair and reasonable”.
If you don’t think it is, you can complain to the company in the first instance.
If you’re not happy with the outcome you can take it to the independent Energy Ombudsman to dispute, but there are a few steps before you get to that stage.
Your supplier must clearly explain why it’s chosen that amount for your direct debit.
If you’ve got credit on your account, you have every right to get it back – although some experts recommend keeping it there through the summer, so your bills don’t go up in the winter when you use more energy.
Your supplier must refund you or explain exactly why not otherwise and the regulator, Ofgem, can fine suppliers if they don’t.
If you are disputing a bill, taking a meter reading is a must.
That way the company can’t rely on estimates, which may lead to you being overcharged – a reading leaves no room for error either, as it shows precisely what you actually used.
If it’s lower than your estimate, you can ask your provider to lower your monthly direct debit to a more suitable amount.
If you find you’re always in credit, you should request the direct debit be lowered to reflect your actual annual usage and meter readings.
But beware that you don’t end up in debt later on with a bigger catch-up bill at the end of the year from underpayments racking up.
If you don’t have success in negotiating a lower payment then you can put in a complaint.
You can usually get in touch with your provider by email, letter or telephone, but keep a record of contact that you make so you can reference it later if need be.
Charities like Citizens Advice have template complaint letters you can use to help with the process.
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