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Energy companies must justify their direct debit bonanza

November 4, 2012 3:54 PM

The Welsh Liberal Democrat Assembly Member for South Wales West, Peter Black, has expressed his disappointment at recent figures from both Which? and GoCompare which suggest that energy companies could benefit by many millions of pounds by keeping direct debit customers in credit with them at the end of each year.

'In theory, having a direct debit arrangement with a power supplier make good sense because it helps individuals and families to budget more easily by spreading costs more evenly throughout the year," said Mr. Black. "The energy companies say that aim to ensure that direct debit customers have a zero balance at the end of the year, and that is how it should be.

"Yet GoCompare estimate that these companies benefit by £1 billion's worth of overpayments, and a Which? survey of members paying by direct debit discovered that 56% of them are each in credit by an average of £161. The same Which? survey found that energy companies had asked 59% of those who were already in credit to increase their direct debit for the following year.

"While the rules say the companies must pay credit back either automatically or upon request, they get to choose when this automatic payback will happen. This means they each make up separate rules to suit themselves. Often that benefits the company's balance sheet rather than that of their customer. Perhaps making these companies pay interest on outstanding balances above a certain level would get their attention!

"I am meeting Ofgen later this month. I intend to raise this issue among many others, and urge them to take swift and decisive action to rein in this practice."