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WATCHDOGS have warned energy firms against using the bills crisis to push up customers’ direct debit payments by more than justified.

The price cap on gas and electricity increased by 54 per cent on April 1 – but there is evidence that some companies have doubled monthly direct debit bills.

Some firms also appear to be putting pressure on worried customers to sign up to long-term ripoff tariffs which will lock them into paying extortionate bills for longer than necessary.

At the same time, there are concerns energy firms are sitting on millions of pounds in over-payments from struggling families to prop up their businesses. The industry regulator Ofgem has warned energy retailers that it plans to tackle the scandal and is threatening multimillion pound fines.

The typical annual energy bill is rising by the equivalent of around £700 to almost £2,000 a year, however some firms are pressuring customers to pay even more.

Ofgem’s chief executive Jonathan Brearley said: ‘Concerns have been raised that some suppliers may have been increasing direct debit payments by more than is necessary, or directing customers to tariffs that may not be in their best interest.

‘We have also seen troubling stories about the way some vulnerable customers are being treated when they fall into difficulties.’

Ofgem has launched a series of investigations and reviews into apparent bad practice, backed up with warnings of penalties. Mr Brearley added: ‘This will include stricter supervision of how direct debits are handled, how much they are holding in customer credit balances and ensuring companies are held to higher standards for overall performance on customer service and protecting vulnerable customers.

‘This work will allow Ofgem to determine if companies are fulfilling their licence conditions and to work with them to rectify deficiencies. Where they fail to do so, we will not hesitate to take swift action to enforce compliance, including issuing substantial fines.’

Energy firms have been sitting on millions of pounds in customer balances and money collected from levies on customer bills to fund support for green energy, such as wind farms. Ofgem is concerned the companies are raiding this cash to fund their operations, rather than keeping it safe.

Campaigner Martin Lewis, founder of MoneySavingExpert.com, recently told MPs there are ‘worrying’ signs energy firms are trying to force through much higher increases in monthly direct debit payments than is justified.

‘There is no reason to double someone’s direct debit when they’re in credit and the price cap is going up 54 per cent. That’s not mathematically sound and it’s a breach of licence conditions,’ he said.

Citizens Advice surveys have found customer service levels are crashing. For example, people are finding it difficult to contact their suppliers, creating a risk they will not get the help they need and are entitled to.

Its chief executive Dame Clare Moriarty said: ‘The drop in customer service standards comes at the worst time possible.’

‘A breach of licence conditions’