Is your energy company taking the proverbial?

Citizens Advice urges energy consumers to check their Direct Debits amidst rise in potentially inflated increases 

Local Advice charity, Citizens Advice South Hams is sharing a stark warning about potential unscrupulous practices by some energy suppliers who are using the current hike in energy prices to inflate the Direct Debit payments of many of their customers.

The local advice charity, who have an entire team dedicated to energy advice, has seen an increase in people getting in touch about these issues, with many households in considerable distress.

One client contacted them recently because her supplier was proposing a doubling of her Direct Debit payments, from £61 to £125. The April price cap changes increased the average household energy bill by 54%, but this client was facing a 105% increase, leaving the client severely distressed and desperately trying to restrict her energy usage – despite already being careful. This case was complicated by the client’s previous supplier going bust and awaiting a large credit to be transferred. It appears some suppliers are taking minimal care in reviewing accounts and setting fair payments.

Nick White, Energy Project Manager at the charity, is asking, “Is this reasonable?” A simple energy assessment by him indicated that payments of £90 would cover her annual costs and be in line with the price cap increase.

In another example, the Direct Debit payment has increased from £96 to £181 per month.  Citizens Advice South Hams approached the supplier for the calculations to show how they’d come up with this figure – which they were unable to provide.

Nick also has personal experience of this ‘supplier surcharge’ with his own direct debit payments increasing from £90 to £226 a month.  A simple 54% increase after the price rise in April would have seen the monthly bill rise to £140.

“How many of our low-income households will get caught out by this and end up in unsustainable debt?”, he asks.

”Direct Debits are particularly complicated at the moment – the scale of recent price rises, the impacts of supplier failures when people may have been underpaying, and changes in energy use … all play a part.  We have seen a large increase in contact about these issues and we’ve been sharing our insights with Ofgem on an ongoing basis. Ofgem is currently consulting on credit balance rules which may promote better Direct Debit practices and has also signalled its considering stricter billing rules on this which is a good sign that there may be an opportunity to improve things.

In all circumstances, suppliers should be able to clearly explain the changes that are happening to customers and why they think they’re fair. Where people can’t afford the new amount, the supplier is required to provide affordability support.”

Citizens Advice South Hams is urging all energy consumers to review their energy account and check their Direct Debit amount is affordable and realistic.

Janie Moor, Chief Officer of Citizens Advice South Hams says,” At a time of national crisis we are calling on energy suppliers to act with integrity and put their customers at the heart of their decision making about price increases.”

Advice

  • Suppliers can only change Direct Debits based on price changes and the most up-to-date information about your usage. However, any increase should be proportionate to predicted usage.
  • Your supplier normally has to let you know about a payment increase at least 10 days before it happens – this is known as a ‘direct debit guarantee’. If they don’t, you should complain to your supplier.
  • If you’re concerned your Direct Debit has been increased incorrectly, contact your supplier to ask for an explanation about the changes.
  • You can ask for a credit refund at any time, but it’s a good idea to leave money on your account during summer and autumn to cover higher energy costs in winter. Before claiming back any money, think about:
    • Whether you’re likely to have higher energy bills in the months ahead
    • If it will be difficult to pay your bills without keeping the credit on your account
    • If the amount you’re owed is more than the amount you pay as a monthly direct debit. If it is, you might want to claim back the difference.
  • Your supplier can refuse a refund if they consider it is fair and reasonable to do so, but must explain why this is the case. If you disagree you should complain to the supplier.
  • For further advice, visit the Citizens Advice website.

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Feedback

I found the staff of Citizens Advice South Hams to be very understanding and helpful. I was so worried that without your help I could not have resolved the issue alone, I am so grateful for the help I received.

Deborah – May 2021

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