The founder MoneySavingExpert says May is the best time to see if energy firms are holding too much credit, with some households potentially due large refunds or lower Direct Debit payments.
Martin Lewis says May is the best time to see if energy firms are holding too much credit in your account. (Image: ITV)
Households are being urged to check whether they are overpaying for gas and electricity through their monthly Direct Debit, with Martin Lewis warning some customers could be due refunds worth hundreds of pounds.
Writing in the latest edition of the MoneySavingExpert.com (MSE.com) newsletter, he said May is the “perfect” time to review energy account balances because it is usually the point in the year when households should have the lowest amount of credit on their account. The warmer weather also means less reliance on home heating systems, but your monthly Direct Debit may still be the same amount as it was during the winter months.
He said energy firms are collectively holding more than £3 billion in customer credit balances, with some households potentially paying far more than necessary each month.
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Martin explained that under the typical Direct Debit system, suppliers estimate annual energy use and spread the cost evenly across 12 months. This means households usually build up credit during spring and summer when energy use is lower, before using that credit during colder winter months.
However, Martin the financial guru warned some firms may be overestimating usage or collecting unnecessarily high payments.
He said: “Right now is the moment in the year when you should have the least credit, which makes working out if they’re sitting on too much of your cash easy.”
One customer told MSE.com they successfully reclaimed £380 after discovering their account was more than £700 in credit.
Martin Lewis energy credit checks
Martin highlighted several key checks households should make this month.
Check your balance now
- May is usually when energy accounts are at their lowest credit point, making it easier to identify overpayments.
Update meter readings
- Customers should ensure smart meters are working properly or submit manual readings so suppliers are using accurate usage data.
Look at how much credit you have built up
- Martin said more than around six weeks’ worth of Direct Debit payments in credit could be a sign bills are set too high.
Ask for an explanation or refund
- Energy suppliers are required under licence conditions to set fair Direct Debits and refund excess credit where appropriate.
Complain if necessary
- Customers unhappy with a supplier’s response can raise a formal complaint and escalate it to the Energy Ombudsman.
Consider Variable Direct Debit tariffs
- Some suppliers offer tariffs where customers pay only for the energy they use each month without paying the higher prices often linked to paying on receipt of bills.
Martin also warned that the energy Price Cap is expected to rise again in July, meaning some households may still want to keep a small buffer of credit on their account. Ofgem is set to announce the new Price Cap at the end of this month.
You can read Martin’s full guide to checking and claiming energy credit on MSE.com.
