Overpaying on your energy bill

Are you overpaying your gas and electricity bills? Check your direct debits or you may be giving your supplier a free loan.

Updated 27 May 2020  | 3 min read

Key points

  • Overpayments can easily build up if your direct debit is set too high
  • Regularly submitting meter readings can help you avoid overpaying for energy
  • Your supplier must give you a refund if requested – unless they have ‘reasonable grounds’ not to

Research from Which? in 2019 found that two thirds of energy customers are owed money by their supplier. 

Some people in credit with their energy supplier are owed more than £1,000. But just one in ten customers have been refunded without having to ask the company. Only 8% have got in contact to ask for a refund, with the money returned in 92% of cases.

You'll end up overpaying if your direct debits are set too high, and its not uncommon to face delays getting your money back from your supplier.

How can I avoid overpaying?

Direct debit is one of the simplest ways to pay for your energy. But because it’s so easy, you might go months without checking your bill. Then when you eventually do, you find out you’ve been paying too much for gas, electricity or both. 

The best way to prevent overpaying for energy is to check your energy meters regularly. Then you can provide accurate meter readings to your supplier, who will charge you accurately in return. 

Smart meters can help to prevent overpaying. That’s because they give both customers and suppliers real-time information on energy usage. It was expected that most UK homes would have a smart meter by 2020, but the government has pushed back the rollout until 2024. This is the deadline when all suppliers must have offered them to UK household customers.

Many suppliers provide smart meter installation for their tariffs, or they promise to install them in the near future. You could use an energy monitor  as an alternative way of tracking energy usage and avoiding overpaying. 

How to find out if you’ve overpaid for energy

The easiest way to check if you’ve been overpaying is to look at your energy bill. Look out for CR (credit) – the figure next to it indicates how much money you’re owed from your supplier. DB (or debit) means you’ve used more energy than you’ve paid for and owe your supplier.

You can get in contact with your supplier directly to find out if they owe you money. Ofgem says suppliers must refund you promptly if you request it. That’s unless they have reasonable grounds to refuse paying you.

Big suppliers tend to review customers’ accounts yearly. They could automatically reimburse credit to your account, so long as they have an accurate meter reading. They might also tweak your direct debit payments to make them more accurate. 

Bear in mind you could be overpaying for energy simply because you’re not on the right deal. Make sure you take the time to shop around and compare gas and electricity tariffs and suppliers. This is the best way to ensure you pay the right price for energy.

Underpaying for energy 

It’s possible to underpay for energy too. This might happen if your direct debit is set too low, and/or you use more energy than you did in previous years. 

Underpaying for energy doesn’t mean you’ll pay less. A direct debit set too low could mean you end up with an unexpected bill to cover the shortfall at the end of the year. 

Things are different if you haven’t been charged correctly for energy. Ofgem legislation on so-called ‘backbilling’ means that suppliers can’t seek payment for unbilled energy used more than one year after the error was detected and an accurate bill was issued. 

This might not apply if you’ve behaved unreasonably – i.e. in a way that stopped your supplier from billing you correctly. 

The lowdown on direct debit  

Using a direct debit is a quick and simple way to pay your energy bills. 

This method essentially smooths out seasonal variations in energy usage. Rather than charging lower bills in summer and higher bills in winter, direct debit payments are spread equally across the year. This gives customers greater clarity of what’s going out each month. 

Another benefit of direct debit is that many suppliers offer a discount for customers choosing this payment method. 

While overpayments during the summer months can offset higher costs in the winter, a surplus can quickly build up if the estimated usage is set too high. 

The best thing to do is keep a close eye on your energy bills and speak with your supplier if you think you’re owed money. 

And remember: shopping around and comparing tariffs and suppliers is the best way to get a great deal on energy.