Energy credit refunds: Should you ask your supplier to pay you some money back?

Suppliers are sitting on a £4.5 billion pile of customer credit, up from £1.4 billion last spring.

The money has built up after an unusually mild start to the winter — and the fact many of us are cutting back on heating to keep costs down.

Research by Nationwide suggests almost two-thirds of us are in credit on our accounts. And three in ten of those have more than £200 in credit owed to them. 

Research by Nationwide suggests almost two-thirds of us are in credit on our energy accounts. And three in ten of those have more than £200 in credit owed to them

Our own postbag is filled with tales of readers who have hundreds, if not thousands, of pounds gathering dust in their credit balances.

But the question of whether you should ask for the money back is more complicated than it may seem.

Experts say it is wise to leave enough money in your account to cover one or two months’ bills. With energy prices soaring to an average of more than £200 a month, that could mean leaving £400 in your account.

But if you are much more than this in credit, consumer champion Martyn James says it could be worth asking for a refund as we enter the new year. He says: ‘Energy companies can make it really unclear how much money you have in your account and what they are using that money for.

‘Now is the time to ask these questions and take regular meter readings to work out how much you actually need.’

Often, households end up ‘in credit’ when they pay for more than they use via direct debit payments.

Typically, balances swell during the summer, when usage is lower. Customers then burn through these funds in the winter. But October and November were mostly mild this year so credit balances have crept up.

Rules set out by the regulator Ofgem say customers can ask for a refund on their credit balance at any time and that these requests should be processed ‘promptly’.

However, we know from our readers that this doesn’t always happen.

Retired teacher Jacqueline Watts had to wait six weeks for a refund from British Gas. The 71-year-old, from Dorset, was £732 in credit when the supplier insisted on raising her direct debit from £165 to £361.

British Gas agreed to refund her balance but was slow to make the transfer. Jacqueline says: ‘I’ve got grandchildren and I need to pay the bills. I’m disgusted energy companies are behaving like this.’

Track usage: Often, households end up ‘in credit’ when they pay for more than they use via direct debit payments

After Money Mail intervened, British Gas refunded her immediately and apologised for the delay.

The way suppliers use these funds came under scrutiny last year when nearly 30 firms went bust due to soaring wholesale costs. In June, Jonathan Brearley, chief executive of the regulator Ofgem, accused firms of using credit balances as an ‘interest-free credit card’.

The watchdog was expected to bring in new rules which would make it mandatory for energy suppliers to ringfence customer cash, but it eventually decided against doing so.

Scott Dixon, who runs the website The Complaints Resolver, says: ‘Customers need to push hard. 

Make sure that all dialogue is in writing with screenshots of live chats so you have a paper trail as evidence to escalate a complaint if necessary. Don’t give up and don’t be fobbed off.’

How to get an energy credit refund 

Some suppliers will automatically refund money owed at the end of the year, or they might repay you by lowering your monthly payments.

Otherwise customers can request a refund at any time. To do so, submit an up-to-date meter reading and review your bills to get an accurate gauge of how much you are using.

Firms can reject your request for a refund if they have a good reason, for example, if you have only a small amount of credit. Every supplier has their own threshold at which they are willing to let you cash out your credit.

If you are denied a refund you can raise a formal complaint with your energy company. 

You can escalate this to the Energy Ombudsman if you do not receive a sufficient response within eight weeks from your supplier. You can also contact Ofgem if you have any concerns.

But before you initiate this process, bear in mind that the Energy Price Guarantee — which caps the average domestic bill at £2,500 a year — will expire in April. A similar measure is likely to take its place but is expected to be less generous.

Gareth Kloet, energy spokesman for GoCompare, says: ‘There is no doubt energy prices are going to go up again next year, so if you can hold out it might be worth keeping more money than usual in your account.’

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This post first appeared on Dailymail.co.uk