Energy News

Energy bills: Consumers win direct debit fight

Friday 7 August, 2009

By Seamour Rathore seamour@consumerchoices.co.uk

Consumer victory as energy regulator Ofgem promises to outlaw unreasonable gas and electricity direct debit bills before winter sets in.

Energy regulator Ofgem has finally cracked down on excessive direct debit payments the energy giants demand from customers.

The “big six” energy companies will also have to justify why they are holding onto customers’ money when a surplus builds up due to overcharging on direct debit payments.

Ofgem will put a new condition in the energy companies’ licences to ensure direct debit sums demanded are clearly explained and based on the best available information.The move follows customer complaints, a Which? campaign, and Ofgem's own review.

Ofgem chief executive, Alistair Buchanan, said: “We are concerned that if customers cannot clearly understand how their payment plan works they will lose confidence.

“The proposed licence condition will help give customers peace of mind that the amount they are being asked to pay is based on their likely energy use.”

Ofgem also today published further customer protection measures:

• Clearer bills stating which tariff the customer is on and reminding them that they can switch energy suppliers
• New annual statements informing people how much energy they’ve used in the past year and how much their energy is likely to cost them in the coming year
• A new licence condition will be introduced on 1 September to prevent overcharging on prepayment meters
• Tougher rules on doorstep sales.

Chris Eagle, commercial manager at Energychoices.co.uk, said: “Energy companies will no longer be able to use customers' direct debit surpluses as an interest-free loan.

“We also know from our users emails that energy bills need to be much clearer. An annual summary and forecast of charges for the coming year will help consumers switch energy suppliers and secure a cheaper deal.”