JONATHAN BROCKLEBANK: Energy firms treat us all like an interest free company credit card… it’s one big racket – and it needs to stop
The columnist argues that energy suppliers’ direct-debit systems can require customers to build unnecessarily large credit balances, effectively giving firms access to money before it is owed. He says this is particularly troubling during a cost-of-living crisis, as households lose potential savings interest while suppliers benefit from holding the funds.
The article follows Ofgem’s announcement of a 3.6% rise in the gas and electricity price cap, estimated to add £60 to the average annual household bill. The writer says his supplier planned to raise his monthly payment from £156 to £210 despite his account being £531 in credit, and contends that suppliers’ calculations overemphasise worst-case winter costs rather than reflecting seasonal usage and existing balances.
- Columnist criticises energy firms’ use of large direct-debit credit buffers.
- Ofgem’s price cap rise is expected to add £60 annually.
- He says suppliers’ payment estimates can exceed customers’ likely needs.
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Energy suppliers often use direct debit to collect the same amount each month, even though household energy use changes with the seasons. This can leave customers in credit during warmer months, with the balance intended to help cover higher winter bills.
Ofgem sets a cap on the rates suppliers can charge for energy, and changes to it can affect household bills. Suppliers also estimate how much each customer should pay by direct debit, taking expected energy use and account balances into consideration.
The issue matters because money held in a customer’s account may not be available to them while it is in credit. Jonathan Brocklebank’s column questions whether suppliers’ payment estimates leave households with more credit than they need.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Suppliers should set direct debits to reflect customers’ likely use and existing credit, rather than routinely accumulating large balances. Holding money households could otherwise use or save is especially burdensome during a cost-of-living squeeze, and clearer calculations and quicker refunds would help make billing fairer.
The case against
Energy use and bills vary through the year, while suppliers must cover the cost of energy as customers consume it and manage the risk of underpayment or arrears. A higher direct debit can spread winter costs and build a buffer against price or usage changes; keeping some credit may therefore protect customers from a sharp later increase, provided the amount is explained and excess is refunded.