Does your energy supplier owe you money?
Posted by Sam Tonge on 23 May 2018 at 10:04 am
Earlier this month it was revealed that Npower are to raise their energy prices by an average of 5.3% (£64 a year) for consumers. This move follows earlier price rises announced last month by British Gas (5.5%) and EDF (2.7% for electricity).
Npower blame the price increase on policy and the wholesale cost of energy. However, it’s understandable as a consumer to feel aggrieved and perhaps even taken for granted, which is why we strongly suggest reviewing your current tariff and consider switching suppliers through Ofgem-accredited comparison tools.
But did you know that you could also be able to claim money back from your current energy supplier without switching? New research from uSwitch has revealed that suppliers owe 11 million consumers a combined total of £1.3 billion (an average of £121 each for two fifths (40%) of UK homes).
This only applies to those of you who pay your supplier via direct debit and do not provide them with a regular meter reading. In this situation, your supplier will charge you an estimated bill based on what they assume you’ve used, based on your past consumption and number living in the property. This means you would expect to be in ‘credit’ over the warmer summer months, and then see the surplus wiped out over the colder, darker winter when you use more gas and electricity.
How did we get here?
However, despite enduring a cold and uncomfortable winter, it seems surplus credit has remained in many of our live account balances. You could argue the blame lies with your supplier for getting their sums wrong, although the silver lining here is that the overbilling may actually be a result of an increase in energy aware and financially-savvy consumers.
Research from uSwitch revealed that over the winter, two thirds of homes (69%) took action to reduce their energy use, one third (31%) turned down their thermostat, while a quarter (24%) lowered the temperature of individual radiators, all in a bid to keep bills down.
What can we do?
To reduce the likelihood of overpaying or even worse, receiving the nasty surprise that is the notorious back bill as a result of underpaying, you can provide regular readings to your supplier online, via an app or even over the phone. Or if you have a smart meter, you would only be billed for what you use, as consumption data is automatically fed back to your supplier – see: Get smart about smart meters.
But for those of you who are already in this situation, it’s important to know your rights and responsibilities. One option if you’re not currently short of cash could ironically be to stay in credit, leaving the money where it is, to act as a financial cushion or ‘buffer’ when next winter’s energy bills come around.
However, Ofgem suggest that consumers should avoid building up credit balances, by providing their supplier with regular meter readings. It’s also understandable that the majority of us would prefer the cash or wish to claim back the surplus on principle. However, how this will work depends on your supplier.
Ofgem state that you can ask your energy supplier to refund your surplus credit to you and they must do so promptly if you’ve provided them with meter readings (unless there are ‘reasonable grounds’ not to).
If you don’t do this, if (or even when) you’re refunded the money will depend on your own supplier. Most suppliers automatically refund credit balances once a year, although this could be subject to a modest ‘minimum amount’ which varies between providers. However you’re entitled to request a refund at any time, as long as you’ve provided a meter reading.
Therefore, if you’re looking to make a claim on your credit, it’s essential that those of you without smart meters you provide a meter reading, before contacting your energy supplier to find out your eligibility for a refund.
What’s more, if you did decide to switch suppliers, you would be entitled to get this money back anyway, although of course the refund may not necessarily be instantaneous.
Image credit: Images Money
About the author: Sam joined YouGen in 2017 as a Project Officer, after having achieved a BSc (Hons) degree in Geography from Royal Holloway, University of London.
He is passionate about renewable energy and sustainability and has undertaken a variety of placements focused in these areas.
Sam coordinates the YouGen blog, newsletter and recommendation service on behalf of installers, as well as driving the platform forward through an active social media presence.
If you have a question about anything in the above blog, please ask it in the comments section below.
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