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Utility companies' direct debit hikes under the spotlight
Energy regulator Ofgem is considering an investigation into rising direct debit demands from gas and electricity companies, writes Holly Thomas
The Ofgem chief executive has promised to look at a number of complaints from homeowners who have suffered monthly payment hikes.
But it has been reported that many are concerned that they were being charged the extra to simply boost suppliers' cash flow.
An Ofgem spokesman said: "Suppliers should treat their customers fairly and Ofgem expects them to do so. To date we have no quantified evidence indicating misuse of direct debit schemes. We have received this week correspondence from a number of consumers about direct debit payments and we will consider whether this warrants action by Ofgem or other organisations."
Consumers can look to iron out these issues with their energy suppliers directly. Remember that you are usually in credit after the summer as less energy is used over the warmer months. This generally evens out in the colder winter months when households use more energy for heat and light.
As energy prices have increased by 34 per cent to 40 per cent over the past year, suppliers have to raise direct debits to cover these costs. If they do not, customers could well find themselves in arrears in the near future, with large one-off payments to find. If they are in debt to their current supplier, customers cannot switch to a new provider; thus, they could become trapped in uncompetitive tariffs.
Gareth Kloet, head of energy at Confused.com, said: "It's true that some suppliers have been raising direct debit levels, despite the fact that some consumers are in credit, but there are valid reasons for them doing this.
"Direct debit payments – and indeed switching to an online tariff – could save consumers up to £322 per year, so it is worth continuing or switching to use this payment method. If consumers need additional clarification when it comes to their bills, it is advised that they go straight to their supplier – only then can they make an informed decision about whether they are actually being overcharged."
In his Pre-Budget report, Chancellor Alistair Darling announced that Ofgem has been ordered to monitor energy prices and report every three months.
It is hoped that a close watch will encourage fairer pricing if it reveals oil price cuts which reduce wholesale prices, are not passed onto UK consumers quickly enough.
* Holly Thomas is an award-winning financial journalist and Deputy Personal Finance Editor at the Daily Express and Sunday Express. Holly's opinions are her own and are not held by Saga unless specifically stated. The material is for general information only and does not constitute investment, tax, legal, financial, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.
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