Yahoo News Martin Lewis' tips to reclaim energy bill cash after person gets £1000 back from supplier
Thousands of households are overpaying their energy bills each month, with many that pay through a direct debit not realising that they could be sat on a large pile of cash that is rightfully theirs. One savvy Money Saving Expert reader even managed to get £1000 back from his energy supplier after realising he was being overcharged.
The reason for this is that consumers who pay for their gas and electricity each month via direct debit are paying for what their energy supplier estimates as the monthly consumption, which can frequently be overestimated or based on old energy prices. This can lead to some households that are struggling to pay their monthly energy bills actually being hundreds of pounds in credit.
Measures to remove the disparity between the prices charged to direct debit payers and those on prepayment meters have filtered some of the inequality from the system in recent months, but despite this, Martin Lewis has said "the logic of the direct debit cycle remains the same," with many households unknowingly sitting on a large pile of their own cash.
READ MORE: Martin Lewis' Money Saving Expert praises energy fix that saves £135 on price cap
One Money Saving Expert follower said they had been sitting on a large amount of credit that they were able to reclaim, while also lowering their monthly charges. They said: "We had over £1000 credit with our energy supplier, after approaching them I got that repaid and because I've been paying far too much in the first six months they've reduced my direct debit from £265 to £112 per month."
As of April 1, the energy price cap fell by 12 per cent to £1690 for the average household, meaning that bills should start to fall. However, those who pay by direct debit could still be charged each month based on older energy prices. This only affects standard tariffs under the price cap, not fixed-rate deals.
Direct debit payers typically build up credit over the warmer months and debt during the winter months, which is balanced out over the course of the year via a fixed monthly payment. Yet, this can lead to some customers building up large amounts of credit if their usage is lower during the cooler months.
Though this is not ideal for customers, Martin Lewis still recommends that people set up a direct debit, simply because it is the easiest way to pay and can work out cheaper, or make it easier to spread the cost of bills over a year. He said "Direct debit is the cheapest way to pay, so don't ditch it necessarily."
In order to check if you are sitting on a pile of cash leftover from your monthly direct debit payments, it is important to make sure that your meter readings are up to date, then check how much credit you are in. The ideal time to do this is April and May, when most energy consumers will start to be in credit after building up a deficit over the winter.
How to reclaim credit from your energy supplier
If you are already in a significant amount of energy credit, it could be worth ringing your provider to find out if they can refund you the balance. Not all providers will offer a refund, but they have a legal duty to ensure their direct debits are fair, and they have to explain their costs.
Money Saving Expert has an energy bills calculator that can figure out if you are overpaying for energy, and whether you might be able to claim some money back. The site's founder Martin Lewis has laid out four steps for consumers to follow to reclaim their money:
Do a meter reading and share it with your supplier, regular meter readings can help with these claims
If you find out you have lots of money in credit, ask for it back
If you are paying a lot, request that your direct debit be reduced
Write a letter to your energy supplier formally requesting a direct debit reduction if they refuse
