According to regulator Ofgem, half a million households doubled their energy direct debit payments earlier this year even as prices rose by 54%.
The regulator has asked suppliers to review these cases to see if such a large increase was justified.
The order comes as Ofgem revealed that six suppliers had moderate to severe weaknesses in the way they charge customers by direct debit.
These included Ecotricity, Good Energy, Green Energy UK and Utilita Energy.
The UK Energy Incubator Hub (UKEIH), which has since ceased trading, and TruEnergy also showed major weaknesses.
“Suppliers must do all they can, particularly during the current gas crisis, to support customers and to recognize the significant concerns and concerns that increased direct debits can cause,” said Jonathan Brearley, Chief Executive of Ofgem.
“We know excellent service exists, but we want to make sure it’s consistent and standardized across the board. From today’s direct debit insights, there are areas of the market where customers are simply not getting the service they need and rightly expect to receive in these very difficult times.”
Millions of domestic gas and electricity customers pay their bills every month with an identical direct debit payment. This is determined by their supplier based on price and a customer’s past and expected energy consumption.
If someone has paid for more energy than they actually used, a credit is built up.
Consumer groups and the public have complained to the regulator about “bad practices” by some providers – including questions about increased direct debit requirements and excessive balances.
The regulator has previously accused some companies of using customers’ accumulated credit like an “interest-free corporate credit card.”
On April 1st, annual bills for around 18 million households on standard tariffs in England, Wales and Scotland typically rose by £693, a 54% increase. And around 4.5 million prepaid customers saw an average increase of £708 – from £1,309 to £2,017.
Last month, Ofgem announced proposals that included tightening rules on the amount of direct debits suppliers can charge to “ensure the balances don’t become excessive”.
Ofgem also wants to protect credits when suppliers fail, so that costs are not borne by all bill payers.
For households in England, Wales and Scotland, the energy price cap applies to their bills. This caps the amount that utilities can charge per unit of energy and for the base rate, and is set every six months. From this winter, this is expected to change to three months.
Earlier this week, Mr Brearley said prices were likely to rise more than expected this winter.
An industry analyst has forecast a rise of more than £1,200 a year in October. Cornwall Insight said the typical domestic customer would likely be paying £3,244 a year from October, then £3,363 a year from January.
The typical bill is currently around £2,000 a year, following an increase of £700 a year in April.
From Thursday direct payments will be made to low-income households to cover living expenses and to cover energy bills.
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