Energy bills: ‘We cut back but our direct debits trebled’

Amy Appleyard was paying £136 a month to heat and light her home.

Knowing that electricity bills would increase in the fall, she and her family had reduced their electricity consumption.

But they were shocked to be told their monthly direct debit would more than triple to £442.

You are just one of many UK households who have cut their energy but are still being hit with higher debits. But suppliers say bills need to reflect rising energy prices.

It comes after Business Secretary Grant Shapps wrote to energy companies, asking them to ensure bills reflect the amount of energy customers are using and not overestimate charges.

Ms Appleyard, her husband Mike and eight-year-old daughter Kathryn have faced the huge increase in direct debit energy payments despite having cut back at their three-bedroom Greater Manchester home.

“We’ve all gotten a little bit more obsessed with turning off the lights or unplugging chargers,” Ms Appleyard said.

“Also this year we didn’t turn on the heat as early as usual, just maybe for an hour to warm the house.”

She said her family’s “nightmare” began because their supplier cut their monthly direct debit without telling them, and when he did his annual review of her monthly payments, it resulted in a much bigger spike than usual.

“After spending hours on the phone being guaranteed I would pay £200 a month and then seeing £442 still being taken from my account I just burst into tears,” she said.

Discussions have continued since then and Ms Appleyard said she hoped the situation would be resolved soon.

“We only want to pay for the gas and electricity consumed, but it has become very difficult,” she said.

“I was told only £200 would be taken from my account in December but the situation is ongoing and has been terribly stressful.”

Meanwhile, in South Wales, Rory said his direct debits have also gone up while his energy use has gone down, so he ended up getting a £1,400 loan from his supplier.

He told Radio 2’s Jeremy Vine Show that he asked to have his direct debit reduced to a monthly amount he could afford, but his supplier refused.

He said direct debits had increased to £481 even though his monthly consumption was closer to £300.

“I just want to reduce it to an amount I can afford and use the excess to top up. I don’t want all that money sitting there and me paying a ridiculous amount to the utility company,” he said.

Customers who pay their gas and electricity bills by direct debit are compensated for the costs throughout the year in what is known as a smoothing process.

The goal of smoothing is to avoid sudden bill shocks by spreading the costs out over the year, so that even if you use a lot more energy in a winter month, you won’t be in for a nasty surprise.

The bill you receive should be the actual amount you will be billed for your energy. It is a combination of a daily base charge and your metered energy consumption (your unit price per kWh).

It changes every month depending on how much energy you use.

Suppliers encourage direct debit payments by offering customers a discount. They then estimate what your bills will be throughout the year based on gas and electricity prices and your past and projected energy use.

Suppliers should ensure that your direct debit payment is fair and proportionate to your use.

If a customer overpays, they should be able to reclaim the extra amount at the end of the year and possibly reduce their direct debits.

However, rising energy costs – prices have doubled since last year – have faced higher direct debits for most people.

If your direct debit payments are consistently higher than your invoices, you can dispute the amount with your supplier.

Ask them to lower your monthly payments to more accurately reflect the amount of energy you actually use based on your meter readings.

If they refuse you can lodge a complaint with your supplier and if you don’t get satisfaction you can escalate it to the Energy Ombudsman.

Earlier this year, an Ofgem review of how energy companies charge customers by direct debit found about 500,000 households had doubled their payments even as prices rose by 54%.

She urged UK energy suppliers to review the way they charge customers by direct debit.

Ofgem said it has already urged companies to address the issue but stands ready to take further action if necessary.

Over the weekend, Mr Shapps told energy companies: “I’m interested in understanding how you plan to ensure your direct debit scheme doesn’t overestimate charges.”

Energy UK, the industry’s trade association, said rising direct debits were inevitable as bills had to reflect energy prices doubling since last year.

Household energy costs will rise again next year, which will lead to a further increase in direct debits.

The government’s energy price guarantee will be phased out from April, when a typical household’s annual bill will rise to £3,000.