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HomeRenewables38 degreesBillpayers to reclaim energy credit

Billpayers to reclaim energy credit

Over 12,000 billpayers are preparing to claim back energy credit as part of a protest against the current state of the UK’s energy system.

The Warm This Winter campaign is urging households to reclaim credit built up with their energy suppliers to adjust direct debit payments that remain high despite falling energy prices.

According to figures from Uswitch, energy suppliers are holding more than £3 billion in customer credit, with nearly a third of households in credit throughout the year.

The campaign highlights that the combined interest earned by firms from these credit balances was at least £159 million in 2023.

Research by Warm This Winter indicates that 38% of those in permanent credit are from low income households.

These households may have reduced their energy use or cut back on essentials due to high direct debit amounts.

The campaign coincides with forecasts suggesting that the average household energy bill will decrease by another 7% in July, following the latest change to Ofgem’s price cap.

Energy consultants Cornwall Insight predict that typical household bills will fall from £1,690 to £1,574 annually, which is £500 less than the cap in July last year.

The public is encouraged to join the Big Energy Credit Claim Back, starting on 22nd May, to reclaim unused customer credit.

The campaign advises customers not to cancel their direct debits, as this could result in higher unit costs.

Experts, including Martin Lewis, have noted that while building up credit in summer to offset winter energy use is sensible, the current levels of customer credit balances are excessively high.

Fiona Waters, a spokesperson for Warm This Winter, criticised energy companies for holding large amounts of customer money and making substantial profits while providing poor service.

Simon Francis, Co-ordinator 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.”

Matthew McGregor, Chief Executive Officer at 38 Degrees, said: “Claiming back the cash we’ve been overcharged is a simple way for busy people to show energy companies they are sick of this broken energy system.”

Jonathan Bean from Fuel Poverty Action said: “Yet again energy firms have been caught overcharging us. We demand our money back and proper action from Ofgem.”

Jan Shortt, General Secretary of the National Pensioners Convention, added: “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.”

A spokesperson for Ofgem told Energy Live News: “Most customers build up credit during the warmer summer months which helps spread costs through the cold winter months when they use more energy.

“However, while reasonable credit balances can help people manage their bills, consumers have the right to request credit back and should discuss their individual circumstances with their supplier.

“We have strengthened the rules around direct debits to prevent excessive accumulation of consumer credit, and have implemented reporting requirements to notify us when a supplier may be over-relying on customer credit balances.

“If necessary we can, and will, tell suppliers to take action including ringfencing funds. If customers are requesting credit is returned but not receiving it, they should complain to the supplier and then the independent Energy Ombudsman.”

Dhara Vyas, Energy UK’s Deputy Chief Executive, told Energy Live News: “Customers can of course request that credit balances are returned and energy suppliers will look to ensure that there is enough credit left to cover imminent payments.  

“Suppliers regularly review direct debits when energy costs rise or fall and will contact customers directly if they need to make changes.        

“The use of credit balances is closely regulated and Ofgem has the power to require these to be ringfenced, as ultimately this is money that must be returnable to customers.

“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 can also be a challenge setting direct debits during a period of volatile energy prices as we have seen over the last 2/3 years. Previous Ofgem reviews have found that the vast majority of direct debits were calculated correctly.               

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

Energy Live News has contacted Ofgem for comment.

Energy Live News
Energy Live Newshttps://www.energylivenews.com
This article first appeared on Energy Live News, an award winning news service. Their mission is to give you balanced news, analysis, commentary of energy from their dedicated team of quality journalists and production staff.
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