Londoners who pay their energy bills by monthly direct debit (MDD) could be in line for a £65 refund if new rules take effect to oblige energy firms to hand back surplus credit that has built up in customer accounts.
Ofgem, the energy market regulator, says £1.4 billion is held in surplus balances by energy companies. Across the country, around 21 million households pay a fixed amount each month, meaning each could see an average of £65 go back into their bank accounts.
The regulator says this is where the money belongs, and that it shouldn’t be sitting in the energy firms’ bank accounts earning them interest, or – even worse – being used “to fund otherwise unsustainable business practices”.
Energy accounts can go into surplus if the supplier over-estimates how much power you will have to pay for across a 12-month period. This amount is divided by 12 to give the MDD figure.
It is normal for accounts to run a surplus during the summer when consumption is relatively low, but this is mopped up during the winter when we use more heating and lighting in our homes. Ideally, after 12 months, your balance should stand at £0.
The collective surplus of £1.4 billion suggests energy companies have been routinely over-estimating how much customers should be paying each year.
If you’re energy account has an excessive credit balance, you can at any stage ask for this to be returned to you and the energy provider is obliged to give you strong reasons if it believes this should not happen.
Under the Ofgem proposals, the refunding of account surpluses would start to happen automatically from 2022.