Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Are You Owed Hundreds of Pounds in an Energy Refund?
Annie
10th May 2024
Energy costs have rocketed in recent years, and even with last year’s Government support, many of us felt the pinch when it came to paying our electricity and gas bills. But did you know that your energy supplier could owe you money? Here’s why – and how to get your energy refund back.
Should You Claim Your Energy Refund?
What to Do If You’re in Energy Debt
Why You Could Be Owed
The last few years have seen energy prices go through the roof – but they are finally starting to come down. However, when they were on the rise, most energy suppliers increased direct debits for customers to make sure the higher costs of winter months would be covered.
Now, millions of people are owed an energy refund from their supplier because they have built up hundreds of pounds in credit they don’t need. The reason for this is two-fold: first, many direct debits were raised and over-estimated, meaning you could have been paying way more than you needed to, to cover the winter heating and electric bills. This can happen every year, especially if you rely on mostly estimated readings from your supplier.
However, the second reason is more surprising: as the cost of living crisis hit everyone, we all became a lot more aware about ways to save energy in the home – and as we had a particularly mild winter, many of us used our central heating a lot less than usual, too. So, while we were paying more than we needed to for our direct debits, we were also using less energy than usual which reduced bills further.
The Annual Bill Cycle
Typically, May is around the time households should have around a zero credit build-up in their energy account. This is because of the cycle of energy usage and direct debits. Your direct debit is the same amount each month, even though you don’t use that much every month. In the spring and summer, your energy costs are lower. This means you’ll build credit in your account through these months. That credit then gets used up as your winter bills increase with central heating and extra use of appliances like tumble dryers, so by early spring the credit should be levelled out.
However, this year, millions of households have saved more energy AND built up extra credit with their energy supplier because of higher direct debits throughout the last year or so – which means they’re entering the ‘zero’ months of early spring with a significant chunk of cash already built up against their energy bills for the summer.
The USwitch Survey Results
Comparison website USwitch conducted a survey of 16 MILLION energy customers and their accounts, and the results are eye opening. The average household has a credit built up with their energy supplier of £210.08. This varies a lot between regions and households, though – Newcastle has the highest average of £315.58 built up, while five per cent (that’s 800,000 households) have over £500 sitting in their energy account.
In fact, the total amount held of customers’ money held by energy suppliers is around THREE BILLION pounds. Yes, billion. However, what is interesting is that industry regulator Ofgem say this is also around the same amount of debt owed by customers – which could put the industry on shaky ground. However, customer payments should be ‘ringfenced’, which means your money must be returnable to you.
How to Claim Your Money Back
Energy suppliers should return your spare credit to you – but it can take a bit of arguing. The first step is to make a simple request to your supplier – many have a contact email address on their website. It is always best to communicate with your energy supplier in writing, in case you need to take a complaint to the Ombudsman (Ofgem) at a later date.
You might reach an agreement with your supplier to leave a small amount of credit in your account – for example, if you have built £300 credit, you could arrange a £250 refund, leaving £50 in your account. This gives you peace of mind, too. However, you can request it all back if you want it.
If your supplier doesn’t reply to your request or refuses, escalate it as a complaint. They have 8 weeks from the date of your complaint to resolve the matter – and if you still don’t have your refund, you can take it to the Energy Ombudsman who have the power to force the supplier to return your money.
When you raise a complaint with the Ombudsman, you’ll be asked for evidence of your attempt to resolve it with the supplier first – which is why getting everything in writing is ideal. Then, you’ll need to write details of your complaint. It doesn’t need to be reams and reams for something like an energy refund – in fact, you could use this exact wording and fill in the bits in brackets with your own details if you like:
“On (date you requested the refund), I requested the refund of (amount of credit), with my account currently in credit by (total amount of credit on your account). They have (not replied/refused). I wish to access (amount of credit) and request the Ombudsman intervene to return my funds.”
That’s it!
Should You Claim an Energy Refund?
There are reasons both to claim your energy refund and also to leave the account in credit.
You should claim if:
- You don’t plan to move house soon
- There is a significant excess (such as over £200) and you want a partial refund
- You’re in temporary significant financial difficulty
You shouldn’t claim if:
- You want to have lower bills for the rest of the year (you can amend your direct debit and use up your credit)
- You’re in financial difficulty that could last several months (energy bills must be paid so keeping your account in credit could avoid energy debt)
- You’re planning to switch energy supplier soon (wait until you have switched)
- You’re planning to move house soon (different houses use varied amounts of energy so your bills could change – and you might need to switch supplier)
If you decide to keep your credit in your account, make sure you lower your direct debit bill to as little as possible (and remember to put it up again before you run out of credit). This will stop you from adding to the credit and losing money you don’t need to pay out.
What To Do If You Are In Energy Debt
While there are millions of households in credit, unfortunately there are further millions struggling to pay their energy bills. The same survey mentioned above also revealed around four million households owe an average of £194 in energy debt.
If you’re struggling to pay your energy bills, don’t fret – there are things you can do. We’ve created a guide to help you tackle energy debt and make sure it doesn’t have a long-term impact on your finances or your mental health.
Subscribe
Login
0 Comments
