The money saving expert said May is the key time to check if energy firms are holding too much credit built up through Direct Debit payments.
Screenshot(Image: ITV)
Martin Lewis is urging households to check their energy accounts this month as millions of customers could be sitting on unnecessarily large credit balances built up through Direct Debit payments.
Writing on MoneySavingExpert (MSE.com) and discussing the issue on this week’s episode of The Martin Lewis Money Show on ITV, the consumer champion said May is the key point in the energy billing cycle when customers should have little credit left on their accounts after higher winter energy use.
Martin said energy firms are estimated to be holding more than £3 billion of customer money through Direct Debit balances. He explained that households paying by monthly Direct Debit are expected to move between credit and debt during the year because suppliers spread energy costs across 12 months to help avoid large winter bills.
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Martin said: “We’re meant to be in credit for part of the year, debt for the rest.”
However, he warned that many households may now be paying too much because Direct Debits are based on estimated usage, which can often be inaccurate.
The founder of MSE.com said early May is usually when households should have their “minimum credit” balance and some customers may even be around one month’s payment in debt after winter energy use.
He added that customers who are more than one month’s Direct Debit payment in credit during May should consider asking for a refund.
Martin wrote: “If your bill is up to date, your Direct Debit is about right, and you’re in credit – for safety let’s say over one month’s Direct Debit in credit in May – you should look at getting your credit back.”
He urged households to first ensure their account is based on up to date meter readings or a working smart meter before checking whether their balance looks too high.
Martin also warned people not to automatically assume their Direct Debit is fairly set, especially after major energy price changes in recent years and reductions in household energy use.
Under energy licence rules, suppliers must take reasonable steps to ensure Direct Debit levels are fair and explain why excess credit is being held if customers request money back.
Martin said households should contact their supplier and ask why large balances are being kept.
If suppliers refuse to return money without a clear explanation, customers can make a formal complaint and escalate the issue to the Energy Ombudsman.
He also cautioned households against cancelling Direct Debits completely because the cheapest tariffs are usually only available to Direct Debit customers.
You can read the full guide on MSE.com or watch the dedicated segment on The Martin Lewis Money Show Live on the STV Player or ITVX.
