What to do when your energy company tells you to increase your direct debt

HOUSEHOLDS are facing energy bill hikes amid rising wholesale gas prices and shrinking competition but now suppliers are rumoured to be hiking direct debits to cover their own rising costs.

Here are your rights if your energy bill direct debit is increased.

Energy suppliers have been facing rising costs after wholesale gas prices hit record highs this month, while the Ofgem price cap has limited how much they can charge customers on default contracts.

Three suppliers, Daligas, Pure Planet and Colorado Energy have collapsed this weekand 10 have failed since August.

Customers won't lose their supply as they will be automatically moved to a new provider under Ofgem's supplier of last resort scheme.

But consumer charity Citizens Advice has warned that it has heard of suppliers hiking direct debits to shore up their own costs.

The group says direct debit changes must be proportionate to energy usage, so what are your rights if your monthly payments are hiked?

How energy bill direct debits work

One of the first questions suppliers ask when you sign up to a tariff is what your usage is.

They will then calculate how much they think you will spend each year based on how much they charge for each unit of gas and electricity.

The amount can be split over the year and paid through direct debit each month or quarter.

This means you may pay more and build up a credit in the summer months when you use less heating but it could balance out in the winter when usage usually increases.

Should I get a credit refund?

It may be tempting to access the surplus amount of credit that has built up over the summer months, especially if you are worried about your supplier going bust.

Citizens Advice suggests leaving money in your account during the summer and autumn to cover higher energy costs in winter.

Before claiming back any money,you should think about whether you are likely to have higher energy bills in the months ahead and if you can pay them without the credit

Can my direct debit change?

An energy supplier can regularly review your direct debit to check you are paying enough to cover your usage.

Citizens Advice said suppliers can only change direct debits based on the most up-to-date information about your usage so it is important to provide regular meter readings.

A smart meter can also provide accurate readers automatically to your supplier.

Some suppliers increase their direct debits in winter when you are likely to use more energy.

Your supplier normally has to let you know about a payment increase at least 10 days before it happens, known as a 'direct debit guarantee'.

If they don’t, you should complain to your supplier, Citizens Advice said.

Can I cancel my energy bill direct debit?

Cancelling your direct debit without informing the supplier may result in a late fee charge.

Regular missed payments could also harm your credit score.

Citizens Advice suggests that if you are concerned that your direct debit has been increased incorrectly, you should contact your supplier to ask for an explanation about the changes.

What to do if you can’t pay your bills

FALLING behind on your energy bills can be extremely stressful.

If you’re struggling to pay what you owe, contact your supplier as soon as possible.

Your provider has to help you come up with a solution, and you should be able to negotiate a deal that works for you both.

One option is to agree a payment plan where you pay off your debts in affordable instalments.

You may be able to pay off your debts directly from your benefits through the Fuel Direct Scheme.

A fixed amount will automatically be taken to cover what you owe plus your usage.

To be eligible, you must be getting one of the following benefits:

  • Income-based jobseeker’s allowance
  • Income support
  • income-related employment and support allowance
  • Pension credit
  • Universal Credit (but only if you’re not working)

If you cannot come to an agreement with your supplier, they may try to force you to get a prepayment meter installed.

In very rare cases, where you refuse to negotiate, your supplier might threaten you with disconnection.

Ask them to explain the meter readings they have used to set the new bill.

If you are still unhappy, you can complain to your energy supplier.

You can also complain to the Energy Ombudsman if you are unhappy with the response.

Do I have to pay by direct debit for my energy?

Direct debit is just one option for paying your gas and electricity bill.

It spreads your payments on a monthly or quarterly basis.

Another option is to settle the actual bill each month.

You can usually do this online with your provider but it can be hard to predict the costs each month so you need to make sure you have enough money to cover it.

Suppliers usually offer a discount for paying by direct debit so you could also be paying more by using the pay-as-you-go option.

You could also setup a prepayment meter, which you top-up as and when you need energy.

This is generally seen as the most expensive option though.

Should I switch energy supplier

Usually, if you are unhappy with your supplied it would be worth shopping around for a new deal.

But the rising wholesale prices have limited what suppliers can offer and some comparison websites aren't providing tools to let you compare tariffs due to a lack of competitive deals.

MoneySavingExpert Martin Lewis has also advised against switching as there are no deals that are currently cheaper than the Ofgem price cap.

Consumer complaints website Resolver said its users are facing similar issues.

Resolver's Martyn James said: "We know that many energy companies are telling people to increase their direct debit.

"This was always earmarked for this time as the new higher price cap kicked in last week.

"Resolver is reminding people that though their bills will increase, switching will come back in to play when the dust settles and we know which energy firms have survived.

"Those switched over to a new provider after the old one went bust should not be locked in to a new higher tariff. So it's a case of getting through the next month or two."

You could save money on your energy bill with the warm homes discount. Find out if you are eligible.

There is also a  winter fuel payment is paid out to elderly people to help towards heating costs in winter.

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