Direct Energy Debit Warning Where companies are accused of raising the bills – your rights

Energy companies have been accused of running up direct debt even when households are in credit.

According to The Telegraph, suppliers have hoarded up to £2 billion of customer money.


Energy companies have been accused of increasing direct debt on credit homesCredit: PA

Companies including Centrica and Shell have been accused of using the cash as a source of financing while households battle high prices.

Millions of households pay for their energy with “fixed” direct debit payments.

The supplier estimates how much energy you’ll use over the course of 12 months and divides your monthly payments evenly over the year.

The amount can change if your usage goes up or down significantly or gas and electricity prices change as with the Energy Price Guarantee.

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Under the Energy Rates Guarantee, the typical household who pays their bills by direct debit will pay no more than £2,500 per annum.

Sometimes this can mean that you’re paying more for your energy than you actually use, particularly in the warmer months, and that you’re earning credit.

Despite customers being encouraged to cut back on their energy use to save money, The Telegraph found service providers increasing direct debit payments even if by thousands of pounds.

There are no rules preventing companies from using customer funds to keep their business going.

Centrica has denied using the funds as working capital.

Shell has admitted to using customer credit balances as working capital, along with other funding it has access to.

It comes as energy customers brace themselves for a sudden spike in bills from January.

The regulator Ofgem is still setting the price cap on what suppliers can charge and the next update takes effect on January 1.

This means that the discount on bills will change very slightly from this date and millions could see an unexpected spike in their bills.

Martin Lewis previously warned of a spike in billings from this date.

Some energy companies decided to pass these costs on to customers, while others did not.

The Sun has put together a full list of companies that are raising their costs.

How does Energy Direct Debit work?

There are two main types of direct energy debt – fixed and variable.

Most energy customers pay a flat direct debit, which means you pay a fixed amount each month.

Your energy company will calculate your energy cost for the next year and divide it into equal payments.

Most energy companies will use the average amount of gas and electricity used in previous years to calculate your monthly payments.

With a flat direct debit, you can spread out the cost of your energy use without any surprises.

If your energy supplier increases your flat direct debit amount even though your usage is down, you can request a reduction in your flat monthly fee – we’ve explained how to appeal your bill below.

Those with a fixed direct debit are more likely to build up credit during the warmer summer months, and if you’re in credit but your direct debit has skyrocketed this winter, it’s worth the challenge.

But some energy companies give customers the option to pay with a variable direct debit.

With variable direct debit, you can choose to pay a variable amount every month or quarterly, depending on the energy you use.

You’ll pay for the energy you use, which means you’ll likely pay more in the winter and less in the summer.

Some experts argue that this type of direct debit method makes it difficult for households to budget in the colder months, but if you only want to pay for what you use each month, a variable direct debit may be a safe bet.

How to challenge your bill

Before you dispute your bill, it’s a good idea to use an energy calculator to determine exactly how much your usage costs on paper.

You also need to be aware of your rights.

If you pay by direct debit, this monthly amount must be “fair and reasonable”.

If you don’t think so, you can file a complaint with the company in the first place.

If you are not satisfied with the outcome you can take it to the Independent Energy Ombudsman to contest, but there are some steps before you get to this point.

The supplier must clearly explain why he chose this amount for direct debit.

If you have a credit in your account, you have every right to take it back—although some experts recommend keeping it there through the summer, so your bills don’t spike in the winter when you use more energy.

Your supplier has to refund you or explain exactly why this hasn’t happened, and the regulator, Ofgem, can fine suppliers if they don’t.

If you dispute a bill, taking a meter reading is a must.

That way the company can’t rely on estimates, which can lead to overcharging – the reading leaves no room for error either, because it says exactly what you’ve actually used.

If it is less than your estimate, you can ask your service provider to reduce your monthly direct debit to a more appropriate amount.

Martin Lewis’ MoneySavingExpert team of experts says that if you find you’re constantly in credit, you should request a direct debit reduction to reflect your actual annual usage and meter readings.

But beware that you may end up in debt later with a larger compensation bill at the end of the year than a backlog of underpayments.

If you are unsuccessful in negotiating a lower payment, you can file a complaint.

You can usually contact your service provider by email, letter, or phone, but keep a record of the call you make so you can refer back to it later if needed.

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Charities such as Citizens Advice have sample complaint letters that you can use to help with this process.

Meanwhile, free online tools from can help you track and manage your complaint step by step.

Do you have a financial problem that needs sorting out? Contact us by emailing

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