Why energy suppliers owe YOU £1.4bn (and how you can get it back): Greedy firms hoard cash from customers in credit on their bills
Energy suppliers are hoarding more than £1 billion of customers’ cash and making it difficult to get back.
As the weather warms up, gas and electricity bills are falling across the nation. But many households are owed hundreds, even thousands, of pounds after paying too much for their power.
Yet while the process of getting a refund from your supplier should be quick and easy, Money Mail readers say this is rarely the case.
Last year, the resolution service the Energy Ombudsman received more than 1,000 complaints relating to energy refund requests alone
Our postbag has been flooded with customer complaints about how they have had to fight for months to get money back.
The problem is so rife the energy watchdog Ofgem estimates that suppliers are sitting on £1.4 billion of customer cash.
And last year, resolution service the Energy Ombudsman received more than 1,000 complaints relating to energy refund requests alone.
Consumers have become so frustrated they have taken to social media to name and shame the firms responsible.
One social media group directed at supplier Utility Point has more than 300 members.
The page – called Utility Point Owes Me A Refund! – encourages posters to share information and advice on how to get their money back.
But Utility Point is not an isolated case and readers signed up to a range of suppliers – both small and large – have complained that energy providers are holding on tight to credit balances.
So why are suppliers clinging on to our cash? There has been increasing concern that energy suppliers are gambling with the credit balances of their customers
Andrew Long, founder of comparison site Switchcraft, says smaller energy firms are particularly susceptible to using surplus credit balances to their ‘advantage’.
He says: ‘Over the past couple of years we’ve seen several small energy suppliers use customer balances as a financing mechanism and then go bust.
My 18-month wait for £900
Out of pocket: Retired builder Michael Jenkinson is owed more than £900
Retired builder Michael Jenkinson has been fighting for 18 months to get his energy credit refunded — and is now owed more than £900.
The 75-year-old says he feels ‘duped’ by Together Energy and the Energy Ombudsman after a long and stressful battle for the cash.
Michael and his wife Roberta, 73, first requested the refund in September 2019 — when they had just over £300 in their credit balance.
The following April, they swapped energy suppliers but Together Energy continued to take money from their account for a further three months. The couple, from Stafford, then took their complaint to the Energy Ombudsman who brought in an independent investigator to look into the case.
The investigator found that the Jenkinsons were owed £845.87 — and insisted that Together Energy give the couple an extra £100 compensation along with a written apology.
Since then, they have been given repeated excuses by both the Ombudsman and Together Energy for the delays. Roberta says: ‘We feel as though we have been duped.
‘We cannot afford to have this much money taken. We were always speaking to somebody different every time we picked the phone up and there just always seemed to be an excuse.’
Suppliers are almost using their customers as a way of bankrolling themselves to get through a difficult period.’
Ofgem also expressed concern that suppliers were using customer credit balances to fund ‘unsustainable business practices’.
In its consultation published last month, Ofgem said credit surpluses mean suppliers ‘have access to capital they would otherwise need to seek commercially’. It says: ‘This can enable suppliers to take risks.’
Mr Long adds that there is an ‘alarming’ trend in which energy suppliers offer interest on customers’ credit balances.
He says: ‘There is a risk these interest rates will incentivise customers to keep money in their account. But that interest will be meaningless if the company goes bust.’
Supplier OVO is among one of those offering interest on credit balances up to £1,000.
Customers in their first year are offered a 3 per cent daily interest rate which rises to 4 per cent in year two and 5 per cent in year three and beyond.
Similarly, Igloo Energy offers a 3 per cent daily interest rate on credit balances up to £1,000.
By comparison, the average interest rate on an easy-access savings account stands at around 0.16 per cent.
As the weather warms up, gas and electricity bills are falling across the nation. But many households are owed hundreds of pounds after paying too much for their power
Ofgem has proposed new rules to force suppliers to ‘auto-return’ surplus credit direct to customer accounts on the anniversary of when they joined.
The trade association Energy UK said it was working with Ofgem on the proposals, and a spokesman said: ‘We look forward to working with Ofgem and our members to find an approach that best supports customers and ensures that they can continue to benefit from a competitive market.’
However, these new rules will not come into effect until 2022 at the earliest — if approved.
In the meantime, customers who cannot access their funds should contact the Energy Ombudsman.
Ed Dodman, director of regulatory affairs at the Energy Ombudsman, says: ‘Just as people are expected to pay their energy bills on time, we think it’s fair to expect energy suppliers to do the same with refunds.
‘We know from looking at complaints that suppliers can sometimes take too long to issue refunds, which can be stressful for consumers.’
Around 75 per cent of customers now pay for their gas and electricity by monthly direct debit. This helps to even out the cost of power, as you pay the same sum each month throughout the year.
Energy watchdog Ofgem estimates that suppliers are sitting on £1.4bn of customer cash
So while you may be paying for more power than you use in the summer, any credit built up will go towards higher winter bills when the heating is on.
However, if you have reached the end of winter and still have a large credit balance, it is likely that you are overpaying.
And as this credit balance will only increase over the summer, now is the time to ask for a refund and for your power usage to be reassessed.
Richard Neudegg, head of regulation at Uswitch.com, says: ‘A certain amount of energy credit can be a useful cushion for consumers during the winter months, as it can soften the blow of bills spiking.’
But Mr Neudegg warns that suppliers may be hoarding hundreds of pounds worth of customer money.
And Mr Long says that it is up to customers to decide how much money they want to keep in their account.
But he advises that if the value of your credit is more than one month’s worth of bills then it is ‘more than reasonable’ to request a refund.
He says figures under £50 may not be worth requesting — though he insists this depends on your own personal finances, and you are entitled to have your money back no matter how small the sum.
A spokesman for compare themarket agreed that credit balances of around £50 and above might be the point at which customers request a refund.
Rules among suppliers often vary – for example, British Gas says it will only refund claims over £75, otherwise the funds are used to cover your future bills.
‘Customers who are switching suppliers are entitled to ask for any amount of money remaining in their credit account,’ says Mr Long.
Steps to take for a refund
Your first port of call is to formally request a refund from your supplier. Ideally this would be in writing so you have a trail of correspondence as evidence
Ofgem says that suppliers must process a refund ‘promptly, unless there are reasonable grounds not to and they must explain why to the customer’.
You should send your supplier your most recent meter readings to ensure that your balance is up to date.
If you have switched energy suppliers, your old supplier must refund your credit balance within ten days after you have received your final bill. After that, you are entitled to an automatic compensation payment of £30.
If you are struggling to get a refund from your supplier, Ofgem recommends going to the Energy Ombudsman who will investigate the claim.
Mr Long says that if you are really struggling to get your money back, you should consider taking your energy supplier to a small claims court.
He says: ‘It seems scary but it really is an effective solution for getting your refund.’
What on earth is going on with E.on?
Distraught over £1,300 bill: Vera Wilson
When Ann Sainsbury, 82, from Formby, Merseyside, received a letter from energy giant E.ON claiming she owed them more than £2,000, her immediate response was to panic.
Scared that she was about to be cut off, Ann tried to pay the amount straight away over the phone.
She was only stopped because her daughter Annmarie Duggan was looking after her credit cards and refused to let her pay the amount until they had investigated the debt.
Annmarie was highly suspicious, especially after discovering some of the charges were dating back as far as 2015.
She could not understand why E.ON had allowed such a huge debt to accumulate on her mum’s account without ever being told.
Annmarie says: ‘My mum is a very vulnerable pensioner and she was shocked by the sudden bill.
‘It was fortunate that I had her cards — there must be lots of elderly customers who would just pay the bill outright because they’re scared of being cut off.’
E.ON claimed it had not received a meter reading from Ann in the past five years.
However, Ann — who cannot read the meter herself — had allowed a third party contractor to come in and read it twice a year.
After being contacted by Money Mail, E.ON investigated Ann’s case and realised there had been a mix up over the day and night readings so were mistakenly overcharging her. They also realised that Ann’s account was actually £700 in credit which they have now refunded to her.
E.ON also lowered her monthly direct debit and gave her a £150 payment as a goodwill gesture.
Annmarie says: ‘We are so relieved. My mum had become too frightened to use the heating so she has been very cold.’
But Ann’s is not an isolated case.
In the past few months, Money Mail has received dozens of emails from read- ers claiming they have also been contacted by E.ON’s back billing team and told they owe hundreds, often thousands of pounds.
Readers say they have received ‘threatening’ and ‘intimidating’ letters which often appear to be based on a mix-up with meter readings.
Vera Wilson, 78, switched to E.ON last November having been with EDF for several years.
Upon leaving EDF, she was told her account balance was in credit and so she was refunded £97.03.
But last month E.ON sent her an invoice for £1,308.12 which they claimed was based on her old meter readings.
After probing the issue, E.ON agreed the debt should be reduced to just over £400. But Vera, from Walney, Cumbria, refuses to pay the money. She says: ‘I can’t understand how I could have been overpaying with EDF but I’m now suddenly underpaying with E.ON.
‘I may be 78 but I’m a retired financial director and I know what I’m talking about.
‘I was absolutely distraught, the whole situation has been very stressful.’
After being alerted to Vera’s case by Money Mail, E.ON discovered Vera’s account had been incorrectly billed and gas readings provided by her previous supplier were inaccurate.
Eon apologised to Vera and applied a goodwill payment to her account.
And Marjorie Kerr, 81, from Selkirk in Scotland says she has experienced ‘sleepless nights’ over a £2,398.86 bill from E.ON earlier this year.
Marjorie was an E.ON customer between 2016 and 2019 but had not heard from them since she switched suppliers.
She says: ‘I don’t understand how nobody ever contacted me to tell me I had racked up so much debt. I had not heard from E.ON since 2019.
‘I initially thought the email telling me how much I owed was a scam. It’s been a very upsetting time.
‘It wasn’t even just the money, it was the fact their letter mentioned sending the debt collectors round.’
After being made aware of Marjorie’s case by Money Mail, E.ON got in touch to say her debt had been scrubbed clean as the bill had been sent to her in error.
An E.ON spokesman says: ‘These are individual cases which we have investigated and resolved. As ever, any customer who has a query regarding their account should contact us to see how we can help.’