Is your energy direct debit too high?

There have been “troubling signs” that some energy suppliers have increased household’s direct debits above and beyond that of the energy price cap, warns Ofgem, the energy market regulator.

The energy price cap came into effect in April, causing household energy bills increase by an average of £693 a year. Usually when there is a price cap increase and you are on a standard variable tariff, you would see your energy bills increase in accordance. However, the troubling signs are that the jump in direct debit payments are more than the jump in the price cap. All of this will be discussed below.

How are suppliers overcharging for energy?

Paying for your energy via direct debit is one of the best payment methods to make sure you pay your bills on time. Direct debits usually spread the cost of your energy usage over a year – so you might overpay in the summer when you use less, but then have cash in your account to cover higher winter bills without having to change the amount you pay. It’s also a cheaper way to pay than using a prepayment meter or even paying your bill by cheque at the end of each month.

Suppliers have the opportunity to raise monthly charges, but households must be notified 10 days in advance and the rise must be in accordance with that of your household’s usage.

But there are signs that suppliers have increased household’s direct debits more than necessary in order to build up a cash safety net. If so, this would be done to shield them from any further surges in wholesale prices as a result of the Ukraine crisis.

However, this practice is banned as it is seen as unfair to the consumer.

Ofgem has launched a series of investigations to see whether energy suppliers are operating in accordance with these rules.

How to check if you’re being overcharged

If you are worried that energy suppliers are overcharging you, don’t worry, we have you covered.

It is worth checking these three things to see whether the increase in your direct debits is legitimate or not.

First thing to check is if you were on a cheap fixed tariff contract that had come to an end. If you were, you would be placed on a standard variable tariff in accordance with the latest price cap. This means you could see your energy costs increase further than the 54% price cap rise. So, first things first, check if you had a cheap fixed tariff and whether that has come to an end recently.

The second thing to check is if you moved from a standard variable tariff to a fixed tariff after the price cap, as these fixed tariff deals tend to be more expensive than the price cap.

Third is to check your meter readings to see how much you’re using and work out how much you should be paying using the unit rate and standard charge in your tariff.

How to complain to your energy supplier

If something doesn’t add up and you feel you are being overcharged, it is worth reaching out to your energy supplier to complain.

It is best to go straight to your energy supplier first rather than the energy ombudsman as your supplier may be able to resolve the issue without much problem.

Before picking up the phone, have a pen and paper handy with all the information you need on it. Depending on the type of complaint, you may need figure, costs, and details of the problem. You may also need any customer service or account numbers. This will help streamline the process when you are on the phone to the complaints department. Nothing worse than a phone call taking longer than it needs to!

With everything in front of you, give your energy supplier a call on their designated complaints number. Remember that the supplier is always happy and willing to help resolve any issue, so it is worth staying calm when speaking to them. Not only does the speed up the process but makes it a more pleasant one as well.

Depending on what the complaint is, the complaints department should be able to give you advice and/or solve your problem. If the problem was not resolved on the phone, it might be worth following up the complaint with either a letter or email. In any case, your energy supplier has at least 8 weeks to resolve the matter, starting from the date you made the complaint. If the issue is still not resolved after those 8 weeks, you can still take things further by taking it up with the energy ombudsman.

Make sure to make a note of the date and time of the call, the details of what was discussed and the name of the person you spoke to, as this may be useful later on, especially if you need to escalate the case to the energy ombudsman.

More information on how to make a complaint about your energy supplier can be found at our energy supplier complaints page.

Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.

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