If you pay by direct debit, then you are generally in credit to your supplier for part of the year, and in debt for some of it – but some people have built up too much credit
Millions of UK households could claim a potential £255 refund on overpaid energy credit.
Ofgem has revealed around £3.09billion is sitting in unclaimed energy credit. If you pay by direct debit, then you are generally in credit to your supplier for part of the year, and in debt for some of it.
This is because households use much more energy in the winter, when the temperature drops and we turn the heating on. This means you generally build up credit in the summer, to help pay for the expensive winter months.
But consumer experts including Martin Lewis has previously warned that some people are unnecessarily paying too much, and could have excessive credit in their account.
The MoneySavingExpert.com founder explained a rough rule for when you should consider refunding some of your credit. He said if you have over one month’s worth of direct debit in your account in May, then you should consider getting some of your credit back.
In an article published on the MSE website and updated last month, he said: “You should have little energy credit [in May] or be a month or so in energy debt – so if you’ve a lot of credit then, it’s too much.”
He said another good time to check your account is November, when you would want a buffer zone of a month or two’s worth of credit.
Martin wrote: “Alternatively look in November, when you’d expect to be at most two-and-a-half months in energy credit. If you’ve far more, it’s likely too much (though it does depend on how prices are moving).
“Yet even if it’s another time of year, it should give you a scale of whether you’re likely to be in credit or debt, but always add a month or so wriggle room.”
Citizens Advice suggests “if the amount you’re owed is more than the amount you pay as a monthly direct debit, you might want to claim back the difference“.
But it reminds households that “you should probably leave money on your account during summer and autumn” to cover higher energy costs in winter. If you take all your credit out, you could end up out of pocket over the winter months.
To get a refund, contact your energy supplier directly. You will likely need to give an up-to-date meter reading so it can check that your refund won’t leave you massively in energy debt.
If your supplier says they won’t give you a refund, they must explain why. You can complain to the Energy Ombudsman if you think you’ve been unfairly refused a refund.
Energy bills have just gone up again, with the typical household that pays by direct debit now paying around £1,758 a year for gas and electricity.
The price cap limits how much you can be charged for unit rates of gas and electricity, as well as the standing charges.
It does not set a total cap on how much you can pay for energy, so your bill still depends on how much gas and electricity you use. You will be on the price cap if you are not on a fixed energy tariff.
