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Grant Shapps warns energy companies over direct debit hikes

British Secretary of State for Business, Energy and Industrial Strategy Grant Shapps walks down Whitehall street for a cabinet meeting at Number 10 Downing Street, in London, Britain November 8, 2022. REUTERS/Toby Melville
Grant Shapps has written to CEOs of energy firms about direct debits. (Reuters)

Business secretary Grant Shapps has written to energy companies asking them to make sure customers' direct debits do not over-estimate their charges, and reflect what they are actually using.

In a letter to the chief executives of UK energy firms, Shapps said he was "disturbed" by reports from some consumers that their direct debits were going up, despite them making "huge efforts" to reduce their usage.

The letter, dated Saturday 26 November, called for companies to find a way to make their systems "more responsive" to changes in consumer behaviour and to ensure direct debits do not over-estimate charging.

It comes amid the ongoing cost of living crisis and rising energy prices.

In his recent autumn statement, chancellor Jeremy Hunt extended help from the government for energy bills through its energy price guarantee, but upped it from £2,500 to £3,000 from April.

Business Secretary Grant Shapps urged CEOs to ensure direct debits are responsible to changes in consumer behaviour. (Department for Business, Energy & Industrial Strategy)
In his letter, Shapps urged CEOs to ensure direct debits are responsible to changes in consumer behaviour. (Department for Business, Energy & Industrial Strategy)

In recent weeks, reports have suggested that some customers had seen their direct debit payments increase despite them actively using less energy to save money.

Energy regulator Ofgem recently told 17 British energy suppliers they have to improve how they deal with vulnerable customers.

Read more: How to save money on one of the household appliances that uses the most energy

In his letter to CEOs, Shapps said: "It is critical that consumers are able to manage their bills effectively and direct debit can be an efficient way for families to smooth their energy costs over the year.

"However, I was disturbed to read media reports that some consumers are saying their direct debits are going up when they are making huge efforts to reduce their usage to save money at a time when household incomes are squeezed.

Watch: Average energy bill to rise to £3,000 a year from April under government 'guarantee'

"It is in all our interests that when consumers take sensible steps to reduce their own bills, such as reducing their boiler flow temperature or making their homes more energy efficient, that they are able to see an impact in their bills.

"I am very keen that all suppliers find a way to make their systems more responsive to these positive changes in consumer behaviour and have asked Ofgem to report to me on how this can be achieved.

"With other costs increasing for households, it is critical that we do what we can to help. I am interested to understand how you intend to ensure that your Direct Debit system does not over-estimate charging."