Money Saving Expert Martin Lewis is urging individuals who pay their energy bills via Direct Debit to take immediate action. According to Lewis, many customers may be unknowingly sitting on excess credit, which could potentially result in refunds amounting to hundreds of pounds.
This situation arises because of how Direct Debit payments work, with households often overpaying for energy during the lower-use months, such as summer. The Manchester Evening News highlights that energy companies are holding billions of pounds in customer credit, making it the perfect time to review accounts before the cycle shifts again.
Energy Direct Debit Credit : How It Works
Under the Direct Debit system, energy customers pay a fixed monthly amount regardless of their actual usage. Over time, this can lead to customers accumulating credit, particularly during the summer months when energy usage tends to be lower.
Lewis highlights that energy companies are sitting on around £3 billion in customer credit, and now is the ideal time for users to check their balances as we approach the quieter energy period of the year.
Posting on the social media platform X, Martin Lewis said :
When Should You Check for Overpayment?
The best time to review your credit balance is late April or early May, just before energy companies begin to replenish accounts for the upcoming winter months. According to Lewis, this is typically when accounts show minimal credit or maximum debt. He notes :
We’re heading towards the bottom of the cycle, as late April and early May is usually when you’ve minimal credit/maximum debt before you start to rebuild it.
Martin Lewis suggests that if your account shows more than a month-and-a-half worth of Direct Debits in credit, it might be time to ask for a refund. He explains:
My rough rule of thumb… over a month and a half’s credit right now is likely too much.
He also advises that customers should consider checking their energy account if they are in excess credit :
Yet as this is the low point, I’d suggest if your energy account is up to date and is more than a month-and-a-half worth of Direct Debits in credit, it’s worth considering getting some of that money back.
Your Rights as a Consumer
Energy customers are entitled to ensure that their Direct Debits are set fairly. Under Condition 27 of the gas and electricity supply license rules in England, Scotland, and Wales, suppliers are required to:
- Set fair Direct Debits
- Provide clear explanations of charges
- Refund credits when appropriate
Lewis states:
Monthly Direct Debits are a great budgeting concept, ruined by poor delivery due to firms mis-estimating use or credit-grabbing. Yet you have rights to ensure it is done fairly.
If an energy company does not comply, customers can escalate their complaints to the Energy Ombudsman.
How to Claim Your Credit Back
To claim any potential refund, customers should first ensure their meter readings are up to date. This can be done through smart meters or by submitting a manual reading.
If the company fails to refund excessive credit or provide a clear explanation, Lewis recommends filing a formal complaint and escalating it to the Energy Ombudsman if necessary.
He mentions that some energy firms automatically promise refunds or reduced Direct Debits when your credit reaches a certain threshold, such as on the anniversary of joining.
However, many companies require customers to check their credit themselves :
A few firms do promise automatic refunds or reduced DDs if your credit’s too high on the anniversary of you joining, but others require you to check (see firm-by-firm refund rules).
With refunds potentially amounting to hundreds of pounds, now is the perfect time for Direct Debit payers to check their accounts and reclaim what they’re owed.
