Challenge huge energy bill direct debit increases with our top tips
HOUSEHOLDS who have been automatically switched from failed energy suppliers to new providers are being stung by direct debit rises of nearly 300 per cent.
With the energy price cap having risen by only 54 per cent in April, families feel they are being “robbed” by energy bosses looking to stockpile cash.
A Sun on Sunday investigation has found that firms are set to take vast sums from customers’ bank accounts to give themselves a buffer in case fuel prices rise again.
Energy market regulator Ofgem is now investigating the “troubling signs”.
Business minister Greg Hands last night told The Sun on Sunday: “We’re cracking down on any unacceptable behaviour. Energy suppliers are hereby on notice if they have unfair and unjustified direct debit increases.
“Ofgem’s review will ensure they are held to the high standards the British public expects.”
Read More on the Cost of Living Crisis
The startling rise in household bills comes after the energy price cap — the maximum amount companies can charge per unit of gas and electricity — increased to £1,971 a year for an average household.
When an energy supplier goes bust, regulator Ofgem automatically assigns a new provider — but unsuspecting consumers have seen bills soar after their original providers went bust and they were moved.
Direct debits are based on predicted energy use across the year and then divided into equal monthly payments.
Customers will usually pay more than they need to in the summer so they have enough credit to cover the colder winter months.
Most read in Mone
But firms have to take reasonable steps to make sure the direct debit is fair and based on the best information they have about the amount of fuel a customer uses.
The debits are reviewed at least once a year — and can increase or decrease depending on how much energy has been used.
Those who have been hit include Maxine Cassidy, 33, who used to pay £60 a month in the summer, rising to £90 in the winter, for her gas and electricity with provider Pure Planet.
But after the company went under during Covid she was moved to Shell Energy, who now want to charge her £344 a month — an increase of nearly 300 per cent.
Recruitment consultant Maxine, who lives with partner Joe Small, 41, a mortgage adviser, in a three-bed property in Harpurhey, Manchester, told The Sun on Sunday: “As soon as I got the letter I turned the heating off.
“I’ve got no intention of turning it back on again until the winter.
“I think energy firms are taking the mickey, trying to make the most of the situation and stockpiling as much money as they can.”
Maxine is contesting the new rate.
Shell Energy said the increase in her direct debits included a previous debt.
Teacher Carly Hayward has seen a 222 per cent rise in her direct debit and feels angry and “helpless”.
The 34-year-old was automatically switched to British Gas after PFP Energy went bust during lockdown.
She was shocked when it said her new variable rate was £145 a month — up from the £45 direct debit she was on.
‘We’ve had to turn our heating off’
Carly, who lives with partner Tom, an NHS worker, and their nine-year-old daughter in a two-bed property in Littleport, Cambs, said: “There’s no way we’ll be using that — we’ve always been incredibly frugal about the level of gas and electricity.
“The increase makes no sense whatsoever so I feel robbed as I am sure this is money which should be in my bank account, not being stockpiled by my provider.
“It’s outrageous. I feel helpless. It’s hard enough right now to find money for food and essentials without this extra strain.”
British Gas said Carly is not being overcharged and she is carrying over a debt which is included in her new plan.
A spokesman added: “Her direct debit recalculation also takes into account that she will be rolling off her old fixed tariff and moving on to the standard price cap rate.”
Leigh Divey, 35, is refusing to pay her new tariff after her energy provider increased her bill by more than 300 per cent.
The mother of two, who runs a homecare services business, was paying £64 a month to Pure Planet for gas and electricity.
But when they went bust she was moved to Shell Energy and told her new bill will be £265 a month.
Leigh lives in a three-bedroom house in Watford with her two daughters and partner Billy, 37, who works in film production.
She said: “We are in dispute and refusing to pay the new tariff. I think it is unfair and unrealistic for any energy firm to think their customers would be able to afford that.
“They’ve told me that if I don’t sign up to the tariff I will end up in debt on my energy use. But there is no way we will be using this amount of gas and electricity every month.
“It is incredibly hard. We have a seven-month-old. We are lucky it is summer because we have had to turn our heating off now.”
Check bills
IF you think your direct debit has gone up excessively, you can challenge it.
I’ve heard from customers who have seen charges rise by 100 per cent while their usage has stayed flat.
Take a look at your bill and see how much energy you have used.
If your direct debit has gone up by more than 54 per cent then you may want to request your payments decrease.
Call your energy firm to discuss it.
But beware – you don’t want to end up in debt later on.
Shell Energy said Leigh’s new proposed figure was to stop her getting into debt.
A spokesman added: “We recognise that increasing energy bills are a cause of concern to many customers.”
Jade Plant, an NHS mental health practitioner, pays £246 a month to Octopus Energy after previously paying £74.50 to Avro Energy.
The 30-year-old, who lives in a three-bed house in Wolverhampton with husband Spencer, 36, a carpenter, and their year-old son, said: “When we received our higher bill we contacted Octopus to challenge it. We were advised there was nothing they could do and this was one of the cheapest tariffs.
“We work hard for everything we have, but now it feels as though we’re being punished for working hard just to live.”
An Octopus Energy spokesman said that Jade’s previous supplier Avro had allowed her to pay an artificially low price for the energy she consumed and she faced ending up heavily in debt if she remained on such a low repayment plan.
The spokesman added: “This is not an example of a rip-off price. Avro encouraged customers in with rates that were so low they didn’t even cover costs.
“Another reason why Jade’s direct debit is high is because she is a high energy user, using almost twice the amount of gas that a house her size would use on average.”
Calls to Citizens Advice from desperate families struggling to pay their bills have nearly doubled in the past month.
Last year, a Uswitch survey found suppliers were sitting on £1.8BILLION in credit balances because direct debits were likely to be too high and companies were not attempting to correct them.
Suppliers should automatically return customers’ credit balances to £0 each year on the anniversary of when they started payments.
But the Uswitch survey found that many had not.
Some small energy companies that have gone bust in recent years owe customers millions of pounds, and households are waiting months or even years to be reimbursed by their new suppliers.
Uswitch head of policy Justina Miltienyte told The Sun on Sunday: “Suppliers have a responsibility to make sure that customer payments accurately reflect their energy use.
“Customers also need to be told beforehand that their payments are going up, and the reasons why.”
Last night, Citizens Advice told us they have seen a 42 per cent increase in the number of people contacting them with billing issues in March compared to the level received in February.
Referring to companies charging inflated prices, the organisation’s head of energy policy, Gillian Cooper, said: “Some suppliers have used this underhand tactic to shore up their finances. This is totally unacceptable.
READ MORE SUN STORIES
Read More on The Sun
“Given the pressures facing families, Ofgem needs to clamp down on poor practice to ensure suppliers are only increasing payments for valid reasons.”
An Ofgem spokesman said: “We know customers are worried about increases to direct debits and will be launching a review to ensure suppliers are setting accurate direct debits and do not use customers’ money as working capital.”
Fine threats
BUSINESS Secretary Kwasi Kwarteng has written to regulator Ofgem to ensure suppliers are fulfilling their licence conditions.
And he has asked for stricter supervision of how customers’ direct debits and credit balances are being handled.
Business minister Greg Hands told The Sun on Sunday: “We’re cracking down on any unacceptable behaviour.”
Ofgem has spoken of having “stricter supervision” of firms.
The energy watchdog has raised concerns that suppliers may have been increasing payments by “more than is necessary”.
A spokesman said that “substantial fines” would be issued for companies failing to comply with the regulations.
Probe them
SUN on Sunday Squeeze Team experts have backed calls for more action on the issue.
Martyn James, from consumer champions Resolver, said: “The fact that certain firms seem to be stockpiling cash is simply unacceptable.”
Housing and financial expert Jonathan Rolande, from the National Association of Property Buyers, added: “We are really concerned that potentially vulnerable customers will be hit with inflated direct debits right at a time when household budgets will be under intense pressure.
“With fuel costs up around 50 per cent for most householders, there is no reason direct debits should increase more than that.”
