Scottish Power will award interest once a year to direct debit customers who overpay by more than £100.
From June, it will give households £1 back for every full £33 they are in credit by at their annual direct debit reassessment date, on balances between £100 and £500.
With rewards this high, it may be worth some energy users allowing overpayments as they could get more back than is possible in a normal savings account, says MoneySavingExpert.com creator Martin Lewis.
Last week, consumer lobby group Which? insisted energy companies were effectively getting interest-free loans from consumers by collecting more in direct debit payments than the cost of the energy used.
Energy regulator Ofgem said last Friday that there is no evidence of suppliers systematically taking too much from customers, following an investigation. However, it said power firms often poorly communicated with customers in credit and made it difficult for them to get refunds.
Martyn Hocking, from Which?, says: “Now Scottish Power has announced it plans to compensate customers, we hope to see the rest of the big six play fair and follow their lead. It’s easy to switch supplier, so unhappy customers who feel they’re being overcharged could vote with their feet.”
If you’re owed money by your energy company, read our Energy Direct Debit guide for information on how to get your cash back and get your DD payments lowered.