How to Stop Energy Firms from Hoarding Your Cash

British households are missing out on over £12 million in interest each month due to energy suppliers holding onto billions in customer credit balances. According to recent data from Ofgem, energy companies held £3.7 billion from customers in credit last year, resulting in a loss of around £148 million in potential interest in 2023.

The average household with a balance in credit had £252 in their account, which could have earned £10.08 in interest if deposited in a bank.

Energy bills can be a significant expense for households

Campaigners and money experts are now encouraging households to reclaim credit balances from their energy suppliers to “reset” direct debit payments, which remain high despite falling prices.

Why Do Energy Companies Have My Money?

Most customers pay for energy via direct debit, with an average monthly payment of £141. However, energy use varies seasonally, leading to credit build-up in summer and depletion in winter. This means that customers can find themselves overpaying for energy they haven’t used in the summer, putting their account in credit.

In theory, this extra cash is then balanced out when more energy is used as the temperatures drop towards the end of the year. But while it all usually works out in the end, it does mean customers can have funds sitting in their energy accounts that could be put to better use in the here and now.

Energy credit balances can add up quickly

How to Stop Energy Firms Hoarding Your Money

Greg Marsh, consumer champion and CEO of Nous.co, shared the following tips to stop energy firms hoarding your money:

1. Don’t have more than two thirds of your monthly bill in credit right now: If your credit balance in May was more than two thirds what you pay each month, you should ask for a refund from your supplier.

2. May is the perfect time to ask for a refund: The majority of households pay energy bills by direct debit and are charged the same amount every month. As a result, most of us build credit in the summer and use it up in the winter when our usage is higher.

3. Submit regular meter readings: If you don’t have a working smart meter, make sure you send regular meter readings to your supplier. This means they’ll have accurate information about how much energy you use at different times of the year.

4. Don’t ditch the direct debit: If you think your direct debit is too high, don’t ditch it entirely – it’s the cheapest way to pay for energy.

5. Beware poor value fixed energy deals: Fixed energy deals have started to return to the market, but most don’t offer good value. A fix that looks cheap compared to what you’re paying now could easily end up costing you more over the next year.

6. Most households can save without fixing: Most households are out of contract right now and can save by switching providers with Nous. The majority can save the better part of £150 on their energy bills, without having to commit to a fixed deal.

Switching providers can lead to significant savings

How Can I Claim Back Credit from My Energy Supplier?

The process varies from company to company, but a guide to find out how to claim back credit from the major suppliers is available on the Warm This Winter website. Before you take action, check that you are able to afford to pay more on monthly bills as energy firms may increase your direct debit if you withdraw your credit.

If your energy firm refuses to refund your credit, you can take up a case against them with the Energy Ombudsman.

“Customers should not cancel their direct debits, as this could result in higher unit costs for households. Instead, they recommend resetting energy payments in early summer, which is considered the ideal time for adjustments for the upcoming year.” - Warm This Winter campaign