

Energy direct debits help
Lower your payments & get money back
Paying by monthly direct debit can cut bills by more than £200 a year. Yet suppliers base direct debits on an estimate of your usage. If that's wrong, you can end up overpaying each month. Here's how to make sure yours is fair – and what to do if you don't think it is.
Check your direct debit is right under the new price guarantee rates from January
If you're on a standard tariff (it won't work for fixes), our calculator helps you work out what your direct debit should be under the energy price guarantee. Just tell us your usage and what region you're in (as rates differ) and we'll give you an estimate of what you should be paying. This factors in January's slight rate changes.
How energy suppliers set direct debits
This has always been shrouded in some secrecy – at what point are price changes factored in, can they include predicted future hikes and more. Yet in July, Martin and the Ovo boss called an energy summit, gathering together the chief executives of the big firms. One of the resolutions of that meeting was they agreed to be open about how they decide to apply the direct debit rules. See How your firm sets direct debits.
Key points on energy direct debits
Here are your need-to-knows about how energy direct debits work.
Know your rights
The regulator's licence conditions set out guidelines for "fair and reasonable" direct debits. Under condition 27 of the Gas Supply Licence, suppliers must:
Set fair direct debits. They must take reasonable steps to ensure customers' direct debit levels are based on the best available information, including the quantity of gas and electricity supplied.
Give clear explanations. If you ask, your supplier must clearly explain why it's chosen that amount for its direct debit.
Refund credits. If a credit has accumulated and a customer asks for it back, suppliers must refund it. If the supplier thinks the credit should be withheld, the reasons why must be clearly explained but customers can challenge this (see how to challenge it).
In theory, this should make it much easier for consumers to get fair direct debits set for them and reclaim refunds where due. As this is a licence condition, energy regulator Ofgem can fine suppliers if they breach it.
Annoyingly, Ofgem doesn't set out what's "fair and reasonable". Instead, it leaves it up to the supplier to decide. If you disagree and the company won't sort out your complaint, you can go to the free, independent Energy Ombudsman to dispute it.
How to fight back
While there are guidelines suppliers must stick to – and many offer automatic refunds – you could often still have a fight on your hands to get your cash back. After all, while the companies have your money, they can earn stacks of interest. And right now there are fears struggling firms are increasing direct debits to improve cash flow in these unprecedented times for the energy market.
Here's how to make sure you get what you're owed:
Step 1: Always do a meter reading and send it to your supplier

Don't let the company rely on its estimates: that's just a great excuse for it to set high direct debits. Keep it as accurate as possible by giving regular meter readings.
The info on how to read your meter will be on your bill, or look online. You can usually give readings online, or by calling an automated answer system – or sometimes you can even speak to an actual person.
If you've never given a meter reading before and have been relying on estimates, then do the reading and wait for the updated bill before even attempting to ask to have the debit lowered.
Step 2: If you're heavily in credit ask for your money back
Energy usage is seasonal, so it's expected that between summer and winter, you may have racked up some credit. Yet if you're heavily and disproportionately in credit, then before asking your supplier to lower the direct debit, try to get a chunk of the amount you've overpaid back.
According to regulator Ofgem, suppliers must refund accumulated credit, though it doesn't say how much it thinks is fair.
That said, you may still have to chase. If you think you're owed, call and ask for your cash back. Quote condition 27 of the Gas Supply Licence, which states credits must be refunded and direct debits fair. If it won't reset it, you're entitled to a full explanation, and you can complain to the ombudsman.

You have a right to ask for an explanation of why your direct debit is set at a certain level, so call up and do it. If you're always in credit and it isn't just seasonal, or it's going up out of all proportion to the price cap rise, politely request the direct debit be lowered to reflect your ACTUAL annual usage and meter readings.
It's possible you may have a small debt on the account too. In this case, paying off a £20 debit balance to bring the account to zero, for example, is likely to give you more leverage when renegotiating the direct debit. Customer service staff may sometimes be limited in what they can do due to their computer systems, but paying off the debt may give them leeway.
Do remember that electricity and gas companies rightly should err very slightly on the side of overpayment rather than underpayment, as otherwise you could get a shock at the end of the year with a big catch-up bill. If you're unsuccessful, see the next step.
Step 4: If they won't budge on the phone, formally request the direct debit be lowered
At this point, you've gone through the usual channels, and it's here where you have to make it not worth the energy company's time to continue making you overpay.
Writing a formal letter indicates you're taking it seriously and you're unwilling to let it lie. Write to say your direct debit is set too high, it breaks the energy retailers' code, and threaten if there's no change, you'll ditch and switch.
Fed up with unfair energy direct debits? Can you switch to variable direct debits?
The most common type of Direct Debit are 'fixed' monthly direct debits, yet there is another option known as 'variable' monthly direct debit that is available at British & Scottish Gas, Bulb, E.on, EDF, Octopus Energy and So Energy. It’s not currently available from Ovo and SSE (we're checking with other firms, and we'll update this when we know more).
The rates on both types of direct debit are the same, so in the long run there is no cost difference, the real impact is on your cash flow (what you have coming in and going out each month).
- 'Fixed' monthly direct debits spread costs over the year: Your supplier estimates how much you'll use over the next 12 months, and splits the payments equally with the idea to make budgeting easier. The amount can change if your usage goes up or down significantly, or if gas and electricity rates change. Most people pay this way.
- 'Variable' monthly direct debits pay for what you use: To do this you must either a) have a working smart meter or b) give meter readings every month. What you pay will then depend on what you use each month. Expect much higher bills in the winter and lower in the summer – so this can be a cashflow hit. You generally get a bill a few weeks before your payment is due to go out, letting you know how much your provider will take that month.
So who should be switching to variable direct debit – over to Martin…

"While it causes many frustrations, if the standard monthly fixed direct debits didn’t exist, it’s the type of thing I’d be calling for energy firms to introduce. Smoothing out your costs over a year is a big boon for budgeting and done right should make life easier. So if it isn’t an issue for you, stick with it.
"The problem comes when you feel the estimated direct debit is wrong – and usually the real frustration comes when it is too high – especially if you’ve built up lots of credit. The first thing I’d try and do is see if you can fix that, make sure you’re on a smart meter or giving regular meter readings. If you are, then use our Is your Direct Debit fair? Calculator to see whether actually the direct debit is justified and just feels high because of the price hikes. If it isn’t fair, speak to them to try and get them to lower it.
“If none of that works, then variable direct debit becomes a decent option, but you have to be prepared to shell out more in the winter, and see big swings in what you pay."
"I'm much happier paying for what I actually use"
While it may not be right for everyone, some do prefer paying their supplier only for what they use, and we've even seen people successfully getting their credit back by moving to variable direct debits:
Thank you so much for your energy supplier tips and direct debit calculator. I used your calculator and could see I was being overcharged on my direct debit, and the only way I could get a current invoice to check I was still in credit was to change my direct debit to variable direct debit, which seems a better option.
After giving EDF meter readings yesterday and changing over to whole amount direct debit, it was confirmed this morning that I am £3,831.91 IN CREDIT! Which is being repaid to me.
- Debbie via email
Thanks to your website regarding a variable direct debit, I phoned up Scottish Power and with no hassle I reclaimed over £300 of credit which will be in my bank account in the next few days. I'm much happier paying for what I actually use and feel more in control of my finances. Many thanks for great information.
- Maria via email
Variable Direct Debit is far cheaper than ‘payment on receipt of a bill’
There are very similar payment methods, known as paying on receipt of a bill or paying on demand, where you get a bill each month based on what you've used, but here you'd pay by cash (a manual card payment or via the post office, for example) as and when you get the bill, rather than set it up by direct debit.
Yet this payment option costs substantially more, on average the price cap for paying this way is 10% higher than direct debit (which is the cheapest way to pay) – which means a typical home is currently paying £2,500/year on direct debit, you’d pay £2,754/year on payment of receipt of bills.
Your credit is protected if your provider goes bust
Over 3.5 million people have been affected by supplier failures since September 2021, but don't worry – you're never at risk of losing your energy supply and any credit you're owed will be returned.
Under regulator Ofgem's safety net rules, when a supplier fails, a new one is appointed to take over, and once it does you'll usually be moved on to its standard tariff – the most expensive type of tariff.
If your account is in credit when the supplier goes bust, the new supplier Ofgem appoints to take over will either pay it to you – even if you switched away before it stopped trading – or add it to your new account to pay for future energy use once it takes over your supply.
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How to complain about your energy provider
The energy industry isn't known for having great customer service across the board, and while a provider may be good for some, it can be hell for others. Common problems include incorrect bills, switching issues, direct debits being too high, refund delays and more.
It's always worth trying to call your provider to sort the issue first, but if not, you can use free complaints tool Resolver. The tool helps you manage your complaint, and if the company doesn't play ball, it also helps you escalate your complaint to the free Energy Ombudsman.
In the forum: Tell us your energy direct debit successes and discuss energy overcharging.

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