Households who've switched energy providers only to have their direct debits increased – particularly over the recent summer months when you typically use less – can challenge any unfair increases. Here's what you need to know.

Paying for energy by direct debit rather than cash or cheque can cut bills by £70-£90 each year and can also help people budget as they know exactly how much they'll pay each month or quarter. Join our Cheap Energy Club to find the cheapest tariff for you.

But a direct debit is based on an estimate of your annual usage, which is spread out over a 12-month time period. This means you pay the same amount during winter when you've got the heating on as you do in the summer when the windows are open.

Suppliers taking on new customers tend to err on the side of overpayment rather than underpayment when setting up direct debit amounts, and a number of switchers who moved suppliers last winter have got in touch to say they're concerned and confused about why their direct debits have jumped during the recent summer months.

Over summer it's normal to build up a credit as you use less energy, and you'll likely need this surplus for winter anyway. So over the course of the year you're still gaining, no matter when you switch.

If there's more cash left in your account on the anniversary of when you signed up to the tariff, the big six providers – British Gas, EDF, E.on, Npower, Scottish Power and SSE – all say they'll automatically refund it, though the threshold for this happening varies. For example, a number of providers issue automatic refunds if you're in credit by £5 or more.

With smaller providers you may need to proactively contact them to get your money back. But if you think you're being massively overbilled, fight back. Here's how.

Martin Lewis
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What are the rules?

When you switch supplier, under regulator Ofgem's licensing conditions, your direct debit needs to be "fair and reasonable", and based on the best available information, including the quantity of gas and electricity supplied.

The regulator says: "Suppliers must, under Ofgem rules, take all reasonable steps to ensure that direct debit payments are based on the best available information. Compliance with these rules is important and Ofgem will look closely if there is any evidence that companies are breaching these rules."

It couldn't, however, tell us what it considers to be "fair" or "reasonable" so it's ultimately down to the supplier to decide.

How can I challenge unfair direct debit increases?

If your provider's increased your direct debit by more than you feel is necessary, here's what you can do:

  • Ask your supplier why it's chosen that amount for the direct debit. Under Ofgem rules, it must give a clear explanation. Use our free Cheap Energy Club to input information about your property and to get your likely usage if you don't already know, and then work out an estimated usage and bill.

  • If you're always in credit and it isn't just seasonality, request the direct debit's lowered to reflect your actual usage. If you've a debt on the account, try to pay it off to bring the account to zero which should give you leverage when renegotiating the direct debit.

  • If you've done the above and your bill still hasn't been lowered, you should formally request it. Write to say the direct debit's too high and that it breaks the energy retailers' code and threaten that if there's no change, you'll ditch and switch.

  • If you've complained but your provider still won't budge, take your complaint to the free Ombudsman Services using our free online complaints tool, Resolver*.

For more help with this, see our Fight unfair energy direct debits guide.

Energy direct debit hiked? Challenge it
Energy direct debit hiked? Challenge it

'The way energy bills are calculated is farcical'

Archna Luthra, head of clubs at MoneySavingExpert.com, says: "The way energy bills are calculated is farcical. The supplier guesses at your usage, divides it by twelve and asks you to pay that figure. If it gets it wrong, it might land you with a big bill, or more likely owe you cash. Your direct debit amount isn't actually related to the rate you're paying.

"This can be a nightmare for cash flow but don't let it put you off switching. You have rights. Energy suppliers must set direct debits at a level that is fair and reasonable, so if you don't think yours is, challenge it. Simply ring up and say, 'I had been paying £x, I don't think paying £y is fair'. And remember, you're still gaining overall."

How can I get credit back?

You should always submit regular meter readings to ensure bills are accurate. If you find your account's in credit at the end of the year, ask your provider for your money back.

As outlined above, the big six providers say they issue refunds automatically on the anniversary of when you signed up when you reach a certain trigger amount, such as £5 in credit.

You don't need to wait for this, though depending on the supplier or the time of year – as a supplier may be more reluctant to return credit ahead of the winter as they prefer to have a credit buffer in place – you may only get some of your money back. See our Fight unfair energy direct debits guide for how to get your money back.

Additional reporting by Dan Lautman.

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