Watch out for cash-grab­bing en­ergy firms

The Jewish Chronicle - - Business -

IN TH­ESE TOUGH times, many would think twice about lend­ing money, even to loved ones. So why would you give an in­ter­est free loan to your en­ergy provider? Thou­sands of peo­ple have got let­ters from their en­ergy com­pa­nies, telling them that the amount they need to pay will dou­ble or tre­ble. While en­ergy costs have risen by 50 per cent in 2008 alone, that’s still only a frac­tion of the rise many are see­ing. What’s the cause? Greedy en­ergy com­pa­nies un­nec­es­sar­ily hoik­ing the di­rect debit lev­els.

HAS YOUR PAY­MENT RISEN?

If you pay by di­rect debit, check the amount. Don’t as­sume just be­cause you’re in credit the bill won’t be in­creased.

Gas and elec­tric­ity cus­tomers across the UK are hav­ing their pay­ments pumped up to grossly dis­pro­por­tion­ate lev­els to the amount of en­ergy be­ing used.

It’s im­por­tant to note that this only ap­plies to monthly di­rect debit. Those pay­ing by quar­terly di­rect debit, di­rect billing or pre­pay­ment me­ters gen­er­ally only pay for what they use.

Yet monthly di­rect debit is the cheapest way to pay your gas and elec­tric­ity bills, usu­ally at least ten per cent cheaper than any other method. Even the Prime Min­is­ter has en­cour- aged peo­ple to pay this way, yet he didn’t men­tion the prob­lems.

It’s time we fought back to en­sure that the money stays in our pock­ets rather than boost­ing the en­ergy giants’ cof­fers.

WHAT YOU PAY ISN’T WHAT IT COSTS

The price you are charged for your en­ergy and the amount that you pay ev­ery month are not the same thing. The en­ergy cost is set by the power sup­pli­ers and you will be charged a unit amount for gas and elec­tric­ity, and pos­si­bly a monthly stand­ing charge on top.

But what you ac­tu­ally pay is de­ter­mined by the en­ergy com­pany’s es­ti­mate of your an­nual us­age, di­vided by twelve. So, if they think you’re go­ing to spend £1,200 over the course of the year, then you should be pay­ing a di­rect debit of £100 a month.

The aim is that this min­imises the sea­son­al­ity. Of course, we tend to use more en­ergy in the win­ter months when our homes need more heat­ing, so there should be a small sur­plus af­ter the sum­mer that will be used up in the win­ter. The prob­lem is that the link be­tween what we’re be­ing charged and our ac­tual en­ergy us­age seems to have been lost. One MP has, rightly in my view, ar­gued that this is just be­ing done to boost en­ergy com­pa­nies’ cash flow as, if they take more money from our pock­ets, they can then earn in­ter­est on it and use it for their own pur­poses.

And anec­do­tally it seems to have got much worse over the last year. So much so that even those switch­ing to ‘cheaper’ sup­pli­ers can find them­selves pay­ing more each month.

HOW TO FIGHT BACK:

AL­WAYS DO A ME­TER READ­ING

Never al­low the com­pany to rely on its es­ti­mates; that’s a great ex­cuse for inac­cu­racy. When­ever you get a bill, the first thing to do is to go to your me­ter, take an ac­cu­rate read­ing and re­port it to the sup­plier.

ASK FOR YOUR MONEY BACK.

Be­ing a small amount in credit is fine, as the worse thing is ow­ing the en­ergy com­pany a whack of cash and hav­ing it chase you. Yet if you’re heav­ily and dis­pro­por­tion­ately in credit, it means you’ve sub­stan­tially over­paid. Be­fore even talk­ing about low­er­ing the di­rect debit, try to get back a chunk of the sur­plus back.

Some com­pa­nies have au­to­matic pay­out sys­tems. Bri­tish Gas, for ex­am­ple, should re­fund you if your ac­count is more than £200 in credit. Most other com­pa­nies sim­ply have a re­view ev­ery six or 12 months, so push to en- sure you’re get­ting the right mount of money back.

DE­MAND AN EX­PLA­NA­TION

En­ergy rules give you a right to ask for an ex­pla­na­tion as to why your di­rect debit is set at a cer­tain level. If your deb­its in­creased too much, ask your provider to ex­plain why, and if it’s not jus­ti­fi­able (which is com­mon) re­quest it low­ers your pay­ments so they ac­cu­rately re­flect your use.

If the di­rect debit has been in­creased enor­mously and you were a small amount, eg £20, in debit, one trick that of­ten works is to pay that amount off there and then on the phone. As you are no longer in debit, it can help you ar­gue that your pay­ments should not be in­creased as much.

FOR­MALLY RE­QUEST IT IS LOW­ERED.

If your provider still hasn’t low­ered the di­rect debit amount, it’s time to make a for­mal re­quest, ar­gu­ing that it’s dis­pro­por­tion­ate.

Out­ra­geously, we do not have a le­gal right to have rea­son­able di­rect debit lev­els set. It’s some­thing I be­lieve the Gov­ern­ment needs to change quickly.

Yet writ­ing a for­mal let­ter to your sup­plier will in­di­cate that you are tak­ing it se­ri­ously and are un­will­ing to let the mat­ter lie. Most im­por­tantly, you should men­tion that you will leave the en­ergy com­pany if it doesn’t lower the debit. There’s a sam­ple let­ter on my web­site at www.mon­eysaving­ex­pert.com/en­er­gy­di­rect­debit

COM­PLAIN TO THE OM­BUDS­MAN

If your sup­plier still won’t budge, and you think you are be­ing treated un­fairly, try the En­ergy Om­buds­man, the in­de­pen­dent ar­biter of dis­putes be­tween com­pa­nies and cus­tomers. It will check whether the com­pany has stuck to the in­dus­try’s code of prac­tice and award you com­pen­sa­tion if not.

If none of this works, the nu­clear op­tion is sim­ply to can­cel the di­rect debit. At that point, the en­ergy com­pany should give you an over­pay­ment re­fund. You will of course be pay­ing more if you are not pay­ing by di­rect debit, yet if it’s been so bel­liger­ent, why not ditch it and switch to an­other provider?

Go to www.mon­eysaving­ex­pert.com/ gas­e­lec to find out how.

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