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Energy companies sitting on £1.5bn from overpaid bills

02 December 2014

Millions of UK consumers are owed £96 on average by energy companies in overpaid bills.

New research reveals:

  • 61% of households are currently in credit with their gas and electricity suppliers
  • £96 is the average amount overpaid on utility bills
  • 15% of bill payers are owed over £100

New research reveals that 61% of Brits are overpaying their gas and electricity bills, by £96 on average, which collectively means that energy companies are banking an extra £1.5bn of their customers’ money.

The research commissioned by Gocompare.com Energy also found that:

  • Pensioners (aged 65 plus) are the most likely to be in credit (72%), while customers aged 25 to 34 were least likely to carry a credit balance on their energy bills (48%);  
  • 15% of customers surveyed had paid their energy supplier over £100 more than they needed to;
  • Only 22% said that their energy supplier had refunded the overpayment without being asked to, 15% said they had asked for a refund, while 46% said that they prefer to leave their account in credit hoping it will sort itself out over time.

Commenting on the research, Jeremy Cryer from Gocompare.com said: “Most energy suppliers offer customers discounts for settling their bills by direct debit.  Bills are calculated following an estimate of your annual consumption, which is then usually charged monthly in 12 equal payments.   While direct debits can help with household budgeting by smoothing out seasonal variations in energy usage, if the estimated usage has been set too high, a sizeable surplus can quickly build up.

“Gas and electricity companies usually review direct debit accounts twice a year to look at whether the payments customers have been making are sensible given how much energy they've used, and adjust monthly payments accordingly.  Where accounts are in credit, most companies have an amount over which they will give you an automatic refund.  For example, for British Gas to give an automatic credit refund you need to be £100 in credit while E.ON only requires a balance of £5 - provided they have received a meter reading in the last six months.  

“Energy companies are also obliged to refund overpayments whenever their customers request them to.  However, for them to consider your request you’ll need to provide an up-to-date meter reading. If the refund is withheld, the supplier must explain why and you can challenge the decision.”

Details of the big six energy suppliers’ refund policies can be found on Ofgem’s website https://www.ofgem.gov.uk/ofgem-publications/83041/directdebitleafletaug2013englishweb.pdf

For more help on understanding your energy bill or switching your energy supplier visit http://www.gocompare.com/gas-and-electricity/guide/

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Notes to editors:

On 26 September 2014 an online survey was conducted among 2,002 randomly selected British adults age 18+ who are also Springboard United Kingdom Community members. The margin of error—which measures sampling variability—is +/- 2.2%, 19 times out of 20. The results have been statistically weighted according to the most current data on age, gender, region, and education from the most recent census data, to ensure the sample is representative of the entire adult population of the UK. Discrepancies in or between totals are due to rounding.

*£1.5bn is based on the average credit balance (£96.00) multiplied by the 61% of 26.3 million UK households (ONS 2011) who say they have an overpaid utility bill.  61% of 26.3m = 16.04m households.  £96 x 16.04m = £1.5bn.