Energy companies owe customers £1.17 billion in overpaid bills

12 Nov 2018 Millions of gas and electricity customers who have overpaid their bills are owed on average £84.80 by their supplier, according to new research by weflip, the automatic energy switching service.

The research reveals that 51% of UK households have overpaid their energy by on average, £84.80, while 12% of customers have made overpayments in excess of £100.  Collectively, it means energy companies are benefiting from a whopping £1.17bn of their customers’ money.

Paying by direct debit (DD) is the most convenient ways for most householders to settle their energy bills. DD payments spread the cost evenly across the year, and most energy companies offer a discount for customers paying in this way.  However, energy suppliers base DD payments on their estimate of a customer’s usage over the year.  Customers’ actual usage may differ significantly.  Overpayments arise when providers overestimate usage and set DD payments at a higher rate than the energy is consumed.

There are several options open to customers who find themselves in credit with their energy supplier.  But, before contacting their provider they will need to take an up-to-date meter reading.

Customers can leave the overpayment on their account to offset against future bills, 44% of the customers surveyed take this approach. Or they can ask their supplier to adjust their direct debit payment in line with their actual consumption.  Just over a fifth (21%) of people surveyed had asked for their DD to be reduced.

Customers are also entitled to ask their energy provider, at any time, for a refund (just 12% of the survey participants had requested overpayments to be refunded).  Providers must refund credits whenever they are asked to, unless there are reasonable grounds not to do so.

Alternatively, customers who hold a positive credit balance can wait until their account comes up for its annual review.  Energy suppliers are obliged to review DD accounts once a year, but some do it more frequently.  The purpose of the review is to check whether payments need to be adjusted depending on usage.  Refund policies for the big six energy providers (British Gas, EDF Energy, E.ON, Npower, Scottish Power and SSE) can be found on Ofgem’s website.

Commenting on the research, Amanda Cumine from weflip, said, “Direct debits take the faff out of paying utility bills, but the way they are calculated can leave many customers out of pocket.  While some people will be happy to carry a small surplus to offset higher winter bills, millions more would rather the money was sitting in their bank account rather than that of their energy provider.

“Suppliers calculate customers’ bills by estimating their annual energy consumption then dividing this into 12 equal monthly payments. However, energy usage can change with seasonal variations in the weather or if your domestic situation alters. While providers are required to automatically refund a surplus, they may only do this at the anniversary of your contract and if you provide a meter reading.

“If your account is significantly in credit you should always request a refund as soon as possible and ask your supplier to review your DD payment based on your actual usage.”

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