It seems like barely a moment goes by without another energy story hitting the headlines. In just the last few days alone, regulator Ofgem has announced a new consultation on how to ensure energy firms don’t go under.
Controversy has been sparked by the difficulties some people have experienced in getting refunds of their credit balances. And the Government has written to energy businesses to warn them about overcharging people through direct debits.
Oh, and let’s not forget the basics. It’s getting colder and most people have crumbled and put the heating on. Yet like Times Money Editor, Johanna Noble, recently commented, I don’t know anyone who hasn’t taken steps to cut down on their energy bill.
With such an unrelenting tide of energy news and stories, it’s often easy to forget the most important things. We tend to focus lots on support packages and grants, Government action (or not) and what the future might hold. But the energy market has been challenging for its customers for some time.
The fact of the matter is energy firms make mistakes. Lots of them. A year ago, Ofgem revealed that over one million errors had been identified with switching alone. That’s an extraordinary figure and poses an important question. Can you trust your energy bill?
Here’s my guide to the errors to look for, your rights and how to tackle billing problems.
Big direct debit increases
Even with the current Government Energy Price Guarantee, which fixes energy costs at a standard price until April – an average bill of £2,500 for a typical household – countless numbers of people have got in touch to complain that their direct debit has increased to an unrealistic level.
There are lots of reasons why this might have occured – but remember that the Government has now formally and publicly warned energy firms about overcharging through direct debits. It is for the business to explain to you how they have calculated the increase in what they want you to pay each month.
Energy firms should be using the meter readings you provide to calculate what your energy usage is likely to be over the coming months. However, where there is limited information, they tend to fall back on previous energy consumption. This could be based on estimated readings and therefore not accurate at all. Alternatively, the previous year’s energy use might be correct, but you’ve taken steps to cut back on the amount of energy you use, so the current direct debit does not accurately reflect what you’re using.
Just to add an extra element of complication, the business may be using a credit balance that you’ve run up to reduce the direct debit sum each month – but it might not be clear over what period they are doing this.
Contact the business and ask them to break down the proposed monthly price you are paying but make sure they have regular meter readings if you think they are overcharging you. If you can’t get through on the phone (and many people are telling me they can’t) then you might be able to send the readings through the website or app. Remember that the energy firm must notify you in advance of any change to the direct debit, so keep an eye on your bills or online accounts.
If the bill seems wrong
Sometimes when you look at your bill, it just doesn’t make sense. Don’t try to struggle your way through it. We all have a sense of whether our energy consumption seems realistic or not, so trust your instincts and turn detective.
Both standard and smart meters can make errors, so check out the energy firm’s website for their guidance on troubleshooting your meter. If this doesn’t solve the problem then speak to the firm and request an engineer or assessment of your meter. It helps to have a few details about your home, family and standard energy consumption, so the business can assess whether what you are being billed sounds right or not.
If it looks like the meter might be faulty, the business will ask you to provide daily meter readings for a set period, usually seven days, to see if there’s an obvious problem. If that doesn’t sort things out, the energy firm has a range of options, including sending out engineers or conducting a forensic analysis of your bills.
Because of the pandemic – or problems with energy firms that have gone bust in the past – your current energy provider may have been working off estimates for a long time. Dig out your bills from the last few years and have a look for when the meter was last read either by you or the business. There’ll be a code on your bill that explains how the readings have been obtained. Worryingly, some businesses seem to have discounted actual energy readings given by their customers because they (or their computer systems) think the estimates are more accurate. So don’t assume that your meter reading will have been used – double check it.
Looking to the future, I’d strongly recommend you take a photo of your meter readings and save it somewhere safe, so you can refer back to your records if a dispute arises.
The regulator has a number of rules and regulations around energy billing, but sadly, thousands of people report problems each month that should not be occurring.
One of the biggest rules that gets flouted is ‘back billing’. Under Ofgem’s rules, you should not be back billed for debts that are over 12 months old if you have not been correctly billed for the energy use before. This is a little complicated to explain, so to give you an example, if the energy firm realises it’s made a mistake or relied on wrong readings and reissues a bill that goes back two years, they can only bill you for the last 12 months – and even then, you can dispute the remainder if you don’t think it’s fair or accurate.
There are exceptions. If you’ve deliberately avoided meter reading visits then you can’t benefit as a result of that.
In terms of outstanding debts that you’ve been correctly billed for, in theory the business can pursue it for up to six years. However, if you think you’ve not been treated fairly then you should make a formal complaint.
Ofgem have just confirmed that energy businesses held £1.8 billion in credit from their customers over the last year. If you want your credit back you are entitled to ask for it. There is a slightly unusual regulatory quirk that allows a business to decline a full or partial refund if they have ‘a good reason’ – but I would not expect this to be invoked unless under very specific circumstances.
Many people have reported problems in recalling their credit balances in recent months. Disappointingly, most energy providers don’t seem to offer this as an option on their websites, which forces you to phone up.
Bear in mind that your current monthly direct debit might incorporate using some of your credit balance, so you could find that you pay more if you request the balance back over the coming months. I’d also urge caution on seeking your credit balance back if you are struggling financially. While many people are taking advantage of the much better interest rates and tell me they are putting their credit balances in to these accounts, it takes discipline to avoid spending the cash. Bear in mind that the terms and conditions of saving and notice accounts might mean you don’t make much money from using your recalled credit balances this way.
However, some people are simply fed up with extending a source of credit to energy firms and are requesting their cash back out of bloody-mindedness. I understand this viewpoint – and it’s clear that the whole structure of the energy sector and its billing model needs a radical overall.
That’s not my bill
Some energy bill problems are Orwellian. One of the biggest sources of frustration is when you move in to a new property and are hit with a bill that should belong to the previous tenant or owner. Or even more confusingly, a bill for the few weeks in between the previous occupant vacating and you moving in.
It’s vitally important that you take a meter reading the moment you move in to a property and keep a record of it. I’d take a few over the first few weeks that you move in to be honest. However, all the best laid plans can’t help some situations from arising.
Some energy firms have debt collection procedures that are automated. So you may find that you receive threatening bills or letters for the previous occupant, or worse, the non-occupant during the weeks in-between the last tenant leaving and you moving in. These bills are not your problem and should be returned to the energy firm. However, it’s not unheard of for people to be pursued for debts that don’t belong to them because they live in a home where a debt has been registered.
This leads to a ludicrous situation where it becomes exceptionally difficult to complain to an energy firm about a debt, because you are not the person in debt… I’ve spoken to people who are frustrated beyond words that a business won’t speak to them about a debt they are being chased for because they are not the named party on the account and can’t be identified.
If this happens to you, spare yourself much frustration by making a written complaint. Ask the business to suspend all debt collection procedures against the property while the matter is investigated and make it clear that you will be making a complaint to the Energy Ombudsman if this continues. Debt collectors should be referred back to the energy business too.
Taking it further
Speaking of which, the Energy Ombudsman is a free, fair and impartial alternative to the courts that you can go to if the business does not resolve your complaint. You have to go through the dispute resolution process with the energy firm first – so always use the magic word ‘complaint’ on the phone, in writing or even through social media. The clock starts ticking from that point.
The business has a maximum of eight weeks to resolve the dispute (that doesn’t mean they should take the full eight weeks, mind). They should issue you with a ‘final response’ letter that explains their decision and gives you a timescale to contact the Ombudsman. You can find out more here: https://www.ombudsman-services.org/sectors/energy
Featured in Times Money Mentor – Martyn James