How to pay your energy bill How direct debits are set

Energy Direct debit

How direct debit should help spread the cost of energy evenly over the year

Paying by direct debit spreads your energy costs over the year as your energy supplier takes the same amount from your account each month. Otherwise you'll face huge bills in winter, as you can see from our image - right.

If you provide regular meter readings to your supplier, you can help keep this amount be as accurate as possible.  

Read on to find out more about how you can cut your bills by paying with direct debit, and what to do to get your money back if you're in credit with your energy supplier.

Cut your energy bill by paying with direct debit

More than half of all energy customers pay their bills by monthly direct debit, according to figures from the regulator Ofgem. 

Gas and electricity companies encourage this, as it saves them money processing payments and ensures they have a smooth and predictable cashflow throughout the year.

Paying by monthly direct debit is almost always the cheapest option. It also means that you won't face sudden high bills in winter.

Your monthly energy bill payment

Energy companies use different systems to calculate your direct debit payment. Most firms base it on your predicted electricity and/or gas use for the year ahead (depending on the type of energy tariff you have). This takes into account any existing debit or credit on the account, and is divided into 12 instalments. 

The image, above right, illustrates how a monthly direct debit helps spread the cost of energy across the year, despite energy consumption being higher in the winter months.

Generally, the longer you've been with a supplier and the more actual meter readings it has been given, the more accurate its prediction should be.

But if you’re a new customer and the company has no historical usage data from you or your previous supplier, it has to make assumptions based on factors such as the number of people in your household, the type of heating system and property size. These more general assumptions could make your direct debit inaccurate.

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See our checklist on how to cut your energy costs and avoid an incorrect energy bill, and for help in getting your direct debit set up correctly.

Energy providers' direct debit policies

Energy firms all have slightly different policies, but they should aim for their customers’ accounts to be close to zero after 12 months. But that’s not always the case.

One Which? member who sent us his gas bills was in credit by £271.95 with British Gas. The bill says he will be refunded the £271.95, but it also adds: ‘We’ve found that your payments need to increase from £70 to £90 a month.’

If you have a complaint about your energy company, use our consumer rights guide and find out how to take action.

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