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Energy companies have been told by their regulator, Ofgem, that they must calculate their customers’ direct debit payments more accurately.

The regulator has responded to widespread complaints that energy firms have been setting direct debit bills too high.

Cash surpluses built up by customers eventually offset subsequent bills.

But consumer organisations have accused energy firms of using excessive direct debit income as an interest-free loan.

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“Ofgem reviewed the direct debit arrangements of the six major suppliers after customers complained about significant increases in amounts they were being asked to pay”, the regulator said.

“The new condition in suppliers’ licences would mean they must ensure payment levels are clearly and accurately explained and based on the best available information.

“Suppliers will also need to be able to justify why they are holding onto credit surpluses built up by a customer,” the regulator added.

Better explanation

The curbs on excessive direct debit bills will come into force this winter.

They will affect the bills of the 40% of energy users who pay their bills this way.

In March this year, Ofgem published an initial report on its investigation into the direct debit complaints it had been receiving.

These first emerged last autumn.

Peter Luff, MP for Mid Worcestershire, accused firms of raising direct debit payments even when their customers’ accounts were in credit.

The consumers’ association Which? subsequently accused energy firms of milking their direct debit customer base.

But Ofgem concluded that there was no evidence that gas and electricity firms had been systematically setting their direct debit charges too high.

Instead, the regulator said that firms should make better efforts to explain their billing calculations to customers.

A spokeswoman said this was still its view and there had been no change in its policy.

But after a consultation exercise it wanted to change formally the licences of the energy firms so that if there were any problems in the future it could take swift action.

“We will be watching the situation very closely,” said the spokeswoman.

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This entry was posted on Monday, August 10th, 2009 at 11:28 am and is filed under Energy saving in the home. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.