Has your energy supplier told you to pay a Direct Debit (DD) amount that sounds wrong?
Not just more than you can afford, but one that doesn’t sound right at all?:
- some numbers seem simply incredible, plucked out of nowhere;
- some seem to ignore the large credit on your account.
You can’t complain if the DD is so high just because prices are high – but you can complain if your supplier hasn’t calculated the DD reasonably.
The issue of too high a DD is often linked to someone having a large amount of credit on their account. Some suppliers let you change your DD amount on their app and also let you ask for credit to be repaid. But these don’t always seem to work.
What is happening to prices and your bills
The Ofgem price cap in July was about 17% lower than the government’s Energy Price Guarantee, which ended at the start of July. Now we know prices will fall another 7% in October.
But energy prices are likely to edge up again in January 2024. Next years prices won’t be known for a while and so changes then will probably be ignored when setting your direct debit.
The £400 off electric bills help has ended
A complicating factor is that the government provided £400 of help with electric bills from October 2022-March 2023.
That was roughly £66 a month but different suppliers gave it in different ways:
- some took your direct debit for the full amount as normal and then refunded you £66 a month to your bank account. This includes British Gas, E.ON and E.ON Next, EDF
- others reduced your DD by £66 a month. This includes Shell Energy, Utilita, Utility Warehouse, Octopus, Bulb, Scottish Power.
If your supplier reduced your electric bills so your DD was lower, you will have seen the Direct Debits increase from April 2023 as the £66 deductions have ended.
Your supplier has to explain how the DD figure was calculated
If you don’t know why the Direct Debit is so large, ask your supplier for a breakdown of the number. This explanation should be in plain English. If they won’t do this, send them a formal complaint.
The explanation should include the amount of energy they expect you to consume, the price for the energy you will be paying, and any credit you currently have or any arrears that you owe at the moment.
The supplier should give you details of any meter readings that have helped them arrive at their estimate of the energy they expect you to consume. And if you are being asked to repay arrears, they should say how much you have to pay each month to these.
Does the expected energy consumption look reasonable to you?
If you have been living in the house for over a year, you can compare the meter readings with your bills to check they are correct.
Also check your current meter reading. If that is less than the energy company says it is, they will think you are using more energy than you are. This may explain why the direct debit proposed is too high.
This could be because the energy company is using an estimate or the meter was misread. Tell your energy company the current reading and offer to provide a photograph of it.
Ask them to provide a new direct debit calculation based on this amount. The supplier has to base their DD calculation on the “best and most current information available to them.”
Is there a problem with your meter?
Meter problems are rare but they can happen.
If you are worried about this, read Check if your energy meter is faulty. That gives details of a quick check you can do and explains how to get your supplier to check the meter.
Do you want some of all of the credit to be repaid?
With interest rates on savings now much higher, many people want their credit sitting in their bank account earning them interest. In October 2023, new Ofgem figures showed that energy suppliers had more than £8billion of credit on customer accounts.
The seasonal cycle of energy usage means that you want to have a very low amount of credit in April or May each year and then build up credit during the summer until October, when the heating goes on and your monthly usage starts to rise.
So if in May you are looking at a sizeable amount of credit you can ask for this to be returned. Or if in October you have a large amount but your energy supplier is refusing to reduce your direct debit, you can ask for some of it to be returned.
If all else fails, you can always change suppliers – then the credit has to be refunded to you!
Do you think you will use less energy in future?
A DD is meant to smooth out your payments over the year. You should expect to pay more than you use for the summer months, and less than use for the winter months. So just because it’s summer, your DD shouldn’t be reduced because of this.
If your household has changed – kids left home, no one at home during the day – then this is likely to reduce your usage. If you have more insulation, had double glazing fitted, are stopping using your tumble drier as much, or are planning similar ways to cut your bills, this should also help.
Your supplier may want to see proof of how much your bills are dropping, not take your word for it.
Start taking regular meter readings monthly from now on. Then you can compare your current usage to the same month last year.
Your supplier should then use this to set a Direct Debit amount that reflects your reduction in consumption.
If your supplier refuses to take lower usage into account until you have a full 12 months of data, you should complain, see below. That is not taking into account the “best and most current information available to them.”
If you cannot afford the high DD while complaints are going through, think about switching to paying the monthly bill instead. But to avoid high bill spikes in December-March, a direct debit is preferable as a long-term way to pay.
Have you recently moved in?
In this case, your supplier will base its guess on the previous occupant’s energy usage. This could be way too much if you have a much smaller household, or everyone is out during the day, and you don’t have a pottery kiln in the garage…
If it’s a new build, your energy company will make a guess based on the size of the house.
You can explain this to your supplier. If they won’t change the direct debit now, say you want to pay the monthly bill for the next few months. After that, you can ask them to come up with a more reasonable direct debit based on your actual usage.
Complain if your supplier refuses to change the DD amount
If a supplier won’t change the DD when you have provided reasons and proof of what you are using, you can make a formal complaint to them. You can’t complain because the prices are too high, but you can complain if the DD hasn’t been calculated properly. Or if your supplier is trying to make you repay the arrears at a rate you cannot afford.
When a supplier rejects a complaint, they should send you a “letter of deadlock” and you can take your complaint to the Energy Ombudsman.
If you haven’t received a response in a month, chase it up. If you haven’t received a response after 8 weeks, you can send the complaint to the Ombudsman at that point.
Get help with this
You can get help with problems with energy bills, including issues with a direct debit, from your local Citizens Advice.
They can also help if you are being asked to pay too much to energy bill arrears, advise on other debt problems and see if you are entitled to any extra benefits.