Simple chart reveals why NOW is the best time to check if you’re owed £100s back from your energy supplier
A SIMPLE chart has revealed why NOW is the time to check if you could be owed £100s back from your energy supplier.
Energy companies are holding on to overpaid cash from millions of households and it is the perfect time to check if you’re one of them.
In total providers are believed to be holding on to more than £3b of credit across customer accounts.
The funds have been built up by households who pay a set amount via direct debit each month.
Energy firms decide how much households should pay based on an estimate of their annual usage.
This stops customers from being shocked by a dramatic increase in bills in winter when temperatures drop and usage increases.
But, if your provider’s estimate exceeds your actual usage credit builds up.
And, Money Saving Expert has revealed that now is the perfect time to check if credit is sitting in your account, because households will be coming out of high-use months.
This means their level of credit should be at its lowest before being built up again during the lower-use summer months.
So if a significant amount of credit remains, it might be time to consider taking out cash and asking for your direct debit to be recalculated.
In a blog post Martin Lewis of Money Saving Expert said: “Monthly Direct Debits are a great budgeting concept, ruined by poor delivery due to firms mis-estimating use or credit-grabbing.”
Lewis shared a chart explaining why now is the time to decide whether to withdraw cash sat in accounts.
It demonstrates that spring should be the when you have the lowest amount of credit in your account.
The money expert has advised that sitting on more than a month and a half’s credit is likely to be too much.
This is slightly more than customers would have been advised to sit on last year, due to the 6.4% increase in the energy price cap, introduced earlier this month.
From April 1 a typical household paying for electricity and gas by direct debit will have seen their energy bill rise by £111 to £1,849 a year.
The cap is set by the regulator Ofgem every three months.
It limits the maximum amount an energy firm can charge households for the units of gas and electricity they use.
Around 22 million households in England, Scotland and Wales are on a variable tariff, which means their bills rise and fall in line with the energy price cap.
If you find that you’ve been overpaying for energy and building up excess credit it’s also important to check that your smart meter is working correctly.
How to 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, you may not be paying the right amount anyway.
But if your meter readings are up-to-date you can 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 customers can request a refund by logging into their online account.
As long as you’ve been billed in the last 14 days and you’re not switching providers your credit balance will be refunded to your bank account within 10 working days.
Ovo Energy customers can request a refund if their credit is at least £5 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.
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 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.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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