MARTIN Lewis has warned energy customers about a “worrying” bill trick that could mean they are paying more than they need to.
It concerns direct debits which are rising for millions of billpayers next month.
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The money saving expert has told MPs that there are “worrying issues” over energy companies increasing customers’ direct debits – and even for those in credit.
The price cap will rise by 54% from April 1 reflecting wholesale energy prices which have shot up in recent months.
But Martin told a government committee that the increase to energy bills in response were not always proportional to that rise, and some were increasing by more.
He told the Business, Energy and Industrial Strategy (BEIS) Committee: “There is no reason to double someone’s direct debit when they’re in credit and the price cap is going up 54%.
He claimed this was “not mathematically sound” and “a breach of licence conditions” for energy firms.
Martin didn’t single out any specific supplier but said he was concerned that “a number of companies are doing it to improve their cash flow situation at the expense of their customers”.
He added that he would like to see the regulator, Ofgem, crack down on it.
He said: “It’s right across the board with all companies. Consumers have to be wary.
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“The amount [of suppliers] playing fast and loose that seems to be going on is huge right now.
“We need to crack down and we need to be much tougher with firms that do this.”
More than half of Brits pay energy bills using direct debit, according to Ofgem.
The energy regulator said it reviews all information it receives about supplier behaviour and “takes action where appropriate”.
A spokesperson said: “Suppliers must take all reasonable steps to set direct debit payments based on current and accurate information about a customer’s consumption, as well as other factors including customer credit balances.
“Customers can ask their supplier to refund their credit balance.
“Suppliers must do so promptly, unless there are reasonable grounds not to and they must explain to the customer why.”
How to make sure you’re direct debit is correct
The amount you pay for energy via direct debit is “smoothed” out over a year.
It means you pay the same amount each month, even when your energy usage changes – you generally use more gas and electric in winter and less in summer.
This often leads to billpayers building up a credit with their energy firm.
But if you’re in credit and your direct debit is rising “way above the rate rise, there’s an issue”, Martin has previously warned.
Anyone in this situation who thinks their bill is rising by more than it needs to, should first takes a meter reading and share it with their energy company.
This means that the calculation they use to work out your direct debit is based on your most recent usage.
You can then ask your energy supplier to adjust the amount if you’re not happy.
But energy customers paying by direct debit need to be careful they don’t reduce their monthly payments so low that they end up in debt and owing money to their supplier.
When an energy supplier increases your direct debit, it must explain why and it must give you at least 10 days notice, according to Ofgem.
Energy firms usually review direct debits twice a year, the regulator says.
If you are in a large credit, you can ask for a refund, but building up a credit over the summer usually pays for the higher energy costs over winter.
Martin also took to Twitter to warn direct debit customers about cancelling their direct debits altogether.
He said: “Many talking about cancelling energy direct debits to ‘keep in control’ and just pay when billed. Yet be aware that’s usually charged at a HIGHER RATE.”
For a typical price cap bill paying monthly by direct debit means you’ll pay £1,971, but £2,100 if you are billed quarterly, though exact bills depend on usage.
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