Energy Companies overcharge

15th April 2016 | Commercial Energy

Although December 2015 and February 2016 were the warmest since records began in 1910, only 40% of households saw their charges fall: some customers overpaid by as much as £400 and energy firms overcharged by £1bn for heating this winter.

Around 60% of households pay their energy bills by Direct Debit and it is thought that around eight million are thought to be owed money: the typical household is £132 out of pocket, so the power giants are sitting on a cash pile of around £1bn.

Why does this happen? Energy companies’ finance systems are often antiquated and are not up to the rigours of today’s requirements, and the energy companies would prefer to have customers’ money in their account and rebate it slowly, rather than the other way round: better for cashflow, better for reports and accounts, better for their share price.

British Gas, which has 6.8million customers, saw its profits rocket by 31 per cent to £574million last year. Scottish and Southern Energy, Britain’s second-biggest power firm, almost trebled profits to £101.5million in the six months to the end of September 2015, its latest reports show.

Under industry guidelines, the energy companies are allowed to sit on the money until the customer asks for it back. But there have also been a number of instances recently where customers who are already in credit, have been sent letters by their energy suppliers to say that they need to increase their DD payments until the end of their contracts to ensure a zero balance at the end of the contract. No wonder customers are confused.

And they vote with their feet: between December 2015 and March 2016, British Gas lost 224,000 customers.

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