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Millions to get direct debit energy refunds

Automatic refunds for accounts over £5 in credit

Gas bills

Npower is the fifth of the ‘big six’ energy companies to announce it will refund credit balances of £5 or more on direct debit energy accounts.

Eon has been doing this for a while but in the last few days it was followed by EDF Energy, British Gas, SSE and now Npower. They are joined by smaller supplier First Utility, which will give refunds on credit balances of £10 or more.

To find out what the credit refund policies are for each of the energy suppliers, check out our guide on energy direct debits.

Automatic energy refunds

Under this new agreement, when accounts are reviewed any credit over £5 (or £10 for First Utility) will be refunded without any formal request needing to be made. Customers will often be required to submit a meter reading before their annual account review. The customer will in most cases also be offered to rollover credit to the next bill period instead if they prefer.

Scottish Power hasn’t yet agreed to lower the amount at which it will give an automatic refund. At the moment Scottish Power automatically refunds the whole credit balance only if the customer is in credit by more than one months’ worth of payments or more than £100.

Why pay by direct debit?

Around 55% of energy customers pay by direct debit. Most companies offer discounts if you pay in this way. Paying your gas and electricity bills by direct debit also has the advantage of spreading your yearly cost evenly across the year. As such, you should be able to avoid a big bill in the winter months.

But this only works if your monthly direct debit amount has been set at the right level to start with. Our handy direct debit checklist shows you how to avoid being overcharged or undercharged when paying by direct debit, for example by providing your energy suppliers with regular meter readings.

Which? direct debit investigation

When Which? investigated how many customers were in credit to their energy company and by how much, we found that 56% of direct debit customers were in credit on their energy account after a year, by an average of £161. 

Our investigation also found that, when looking at about 100 energy bills from Which? members, 59% of those who had their direct debit increased were already in credit!

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