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Have you had a bumper energy bill?

We’ve heard from an energy customer who received a £4,000 bill on top of their monthly £150 direct debit. We’re surrounded by companies putting up their prices, so how can we protect ourselves from bumper energy bills?

Surrounded by announcements of gas and electricity prices going up, you’d be forgiven for thinking that hefty energy bills are the norm, and in some cases it can certainly feel that way. The largest single price rise from a big energy company is 9.8%, but some customers are facing bills of hundred of pounds more than they expected.

EDF Energy was the latest to announce a price hike this week – its second in six months – which will inch bills for standard dual fuel tariff customers upwards yet again. Moreover, all the big energy firms, with the exception of British Gas, as well as a number of smaller ones, have pushed up their gas and electricity prices this spring.

However, aside from the bill increases we’ve come to dread, we’re also hearing complaints about huge, unexpected energy bills.

Our consumer research shows a quarter of people are in financial distress, from cutting back on spending to defaulting on essential bills. For these people a sudden bumper bill would be unmanageable.

For example, if you’re with the biggest energy supplier, British Gas, on its standard tariff, your average annual bill comes to around £1,044. So, it’s a nasty shock when your bill ends up being much bigger than the £87 you’re already expected to pay each month.

Citizen’s Advice (CA) took the problem of suppliers sending customers sizeable surprise bills, covering over a year’s usage (called back-billing), to energy regulator Ofgem. CA said in February that as many as 2.1 million households may have had large late energy bills in the last year.

Why the big bills?

Back-bills arise when suppliers estimate billing until they, or you, take an actual meter reading. If this shows you’ve used more energy than your supplier estimated, then they send a catch-up bill to recover the difference. This can add up to a large sum being owed, and billed, all at once.

You can protect yourself from big unexpected bills:

  • Checking when your energy tariff ends
  • Comparing energy prices and switching provider
  • Submitting regular meter readings
  • Changing your direct debit if you notice it’s too low or high (you’ll pay more than you’re using In summer and for less in winter so the cost evens out over the year)
  • Contacting your energy supplier if you think your bill is incorrect

Ofgem takes action

To help protect consumers from unexpectedly large bills, energy regulator Ofgem proposed to ban energy firms from back-billing customers for gas and electricity they used more than 12 months ago.

This has been a voluntary commitment for suppliers since 2007 when firms agreed not to back-bill if they were at fault. However, around 40 new energy suppliers have joined the market since then and

Ofgem is worried that some suppliers aren’t applying the voluntary agreement and are lacking sufficient back-billing protection.
Ofgem expects the new rule should be in place by winter 2017.

Have you had an unexpectedly high bill from your energy supplier? How much was it for and why? What did you do?

Comments
Member

These links might be helpful. As far as I am aware arrangements can be made to pay excess bills in installments.
We should all be encouraged to read meters monthly and send them to our supplier. Smart meters will save this minor chore.

https://www.ofgem.gov.uk/consumers/household-gas-and-electricity-guide/who-contact-if-its-difficult-paying-energy-bills/energy-back-billing-your-rights

http://www.energy-uk.org.uk/customers/energy-industry-codes/code-of-practice-for-accurate-bills.html

Member
Phil says:
15 April 2017

” Smart meters will save this minor chore. ”

When they work or aren’t upset by LED lighting.

I still pay my bill quarterly and submit a reading online so no nasty surprises and by the sound of it much less bother.

Member

Ever since I started to read my meters and supply meter readings, my energy companies have managed to keep me well in credit, despite me supplying accurate and prompt meter readings.

For the past year I have been with e.on and inherited a smart meter when I moved home. From the e.on website:
Say goodbye to unexpected bills and taking your own meter readings – smart meters are here.
No more meter readings
Always receive an accurate bill
Track your energy usage with your Smart Energy Display (SED) – included with your smart meter installation

My bills have the correct figures for usage of gas and electricity but the direct debit payments are excessive. I’ve been paying £119 a month and after the winter quarter my balance was £274.55, accompanied by a note that I don’t need to do anything because the balance will be carried over. Eventually the company worked out they were overcharging me and my monthly payment has been reduced to £51.

I can cope but what about those who are struggling to make ends meet? I’ve had years of experience of energy companies changing direct debits where necessary (and sometimes when not needed), I would like to see an end to these companies holding on to customers’ money.

Member

Many suppliers charge in arrears, so in a sense those customers may be holding energy companies’ money. Assuming smart meters work as intended we could simply pay monthly automatically for what has been used. Currently we can, with some, pay quarterly based on use. Which? could be working out various payment methods with Ofgem that prevent people have over-large credits, while at the same time ensuring they handle the larger payments due in winter, by accumulating sufficient credit.

Member

I am already making monthly payments by direct debit, so paying for what I use would suit me. I don’t know how much it costs to change a direct debit.

Ovo pays its customers 3% interest on balances remaining at the end of the year. I don’t believe their customers build up large credit balances. 🙂

Member

Wavechange , like you I pay by DD but I have a deposit card(Paypoint/PO /etc ) to make up any shortfall in payment its known as- how to pay what you owe –and no more.

Member

My account with E.On seems like a roller coaster ride. Our annual review takes place at the end of December. From January until May 2017 my monthly DD for gas and electricity is £102. I have been notified of an increase in the monthly payment to £142 to start in June. Despite the winter quarter there is a credit balance of £167.74 to which they add the amount they think we’ll use between now and our annual review on 28 December 2017. The total we need to pay is £1,098.92 which has been split into monthly payments. E.On expect our balance to be £0.00 at the next annual review. Because we are approaching the low demand seasons, I think they have, once again, overestimated the consumption and there will be a sizeable drop in our monthly contributions, as last year, in order to hit the zero balance out-turn at the year-end. We shall see. The figures are based on estimated readings. Unfortunately I did not submit a monthly gas meter reading at the end of March because we were away and then I forgot about it; we have a smart meter for electricity but that is a much lower bill so gas is the important number. I might submit a reading today to see if it has any effect.

Member

At least e.on has let me know when they intended to change my direct debit. Scottish Power did not even send an email when they increased it by about 40% – even though I was in credit.

I was aware that I could have asked for my direct debit to be changed on the e.on website but was interested to know how long they would take without my help. The smart meters take readings ever 30 minutes, though I have not worked out how often the readings are sent to the company.

I was with e.on some years back and as John says, it is a roller coaster ride. They were always happy to take action over accumulated credit and on a couple of occasions admitted that they did not understand why I had been asked to pay more when I had a sizeable credit balance.

It would be satisfying to do what Duncan describes, but all my bills are paid by direct debit and I have become lazy about financial matters.

If I switch to another company I may need smart meters and though I won’t be charged, the cost will be shared with other consumers.

Member

It was useful to have six weeks notice of the change in DD. In some circumstances I might have made a lump sum payment in order to keep the monthly outgoings roughly the same.

Member

With a further 8.8% rise in energy prices scheduled for this month, E.on are no doubt making sure there are enough customer credit balances to cover this Wavechange.

Ofgem need to intervene by establishing a fairer system similar to that of Ovo whereby eligible customers can increase or decrease their DDs according to their own usage, or if they fail to submit their meter readings on time, energy companies are allowed to estimate their usage. This would incentivise customers to (a) keep up regular meter readings and (b) would prevent the need for energy companies to pay interest on credit balances.

With energy prices continuing to spiral again without any direct warning and customers having to rely on media bulletins to alert them of this, a fairer system needs to be introduced to prevent energy companies from deliberately allowing customers credit balances to build up in lieu of future imminent price increases.

A Happy Easter Day to Everyone.

Member

I agree, Beryl.

We are on a fixed-price tariff with E.On so I assume that their rate increases are not applicable in our case. Although I normally submit meter readings at the end of each month there is no requirement to do so except quarterly on request; I like to send a monthly reading because it should smooth out any unevenness in the charging in the event that E.On need to produce an estimated reading.

I have been quite satisfied with E.On over the four years we have been with them on a succession of fixed-price tariffs but I have the feeling their days are numbered now.

Member

If my experience is typical, companies are not going to get away with holding on to customers’ money when smart meters are installed.

I’m on a fixed price tariff, Beryl, so e.on is not holding on to my money to protect me from rising prices.

Have a good Easter folks.

Member

For many customers the setting of a uniform monthly payment is a useful budgeting aid, but that is not the case if sudden changes are made in the payment amounts and the payment profile starts to become too uneven with severe up and down movements. I would rather have a variable direct debit that would enable the supplier to charge each month exactly what is owed according to the recorded consumption and price. I have occasionally found that E.On’s system did not take into account the latest payment because it was caught in the processing period between capturing the consumption figure and issuing the bill. Forecasting consumption is tricky at the best of times but weather conditions can upset the calculations and the supplier has no idea what our occupation profile is going to be, so even with submitted readings the production of an estimate is not much better than an educated guess. Payment in arrears would therefore be more accurate and if this were introduced I would be in favour of having a smart gas meter, but I have no doubt there would be a financial penalty for the account always being behind.

Member

I am also on a fixed rate tariff but with OvO and submit monthly readings usually about 2 days before the payment is taken from my bank account.

According to my usage, which as John rightly makes the point, can vary according to weather conditions, holidays etc, I am able to increase or decrease my monthly DD payments to prevent a too high credit balance building up, allowing of course for fluctuation in usage over the whole 12 month period. And don’t forget customers fixed rate contracts are presumably not all terminating at the same time during the course of the whole year and also the advantage energy suppliers have over SVT customers when raising their prices.

I accept privately run companies need to make a profit and attract investors and that customers unfortunately are always open to exploitation in the process. I do however, find it difficult to understand why some of these companies are still able to get away with taking advantage of their customers by procuring and capitalising on their money before they are in receipt of the product they are selling.

Member

For several years I have been on fixed price contracts with most of the “big 6” and the ill-fated GB Energy Supply. I have kept accurate records of my energy use so can submit fairly accurate annual estimates when arranging a new contract. I have never been much in credit; in fact i have usually been in debit, largely because the first payments are taken only a month or two after the contract change has been effected. The exception was GB who, unusually, required the first month’s payment in advance.

I suppose I might be accused of being subsidised by those with credit balances? 🙂 You can only know how much to pay when you have used your energy so there will always be a disparity between who owes what to whom; smart meters might make this disparity minimal. However, if this is their main attribute, at a cost of around £480 per household (based on £11 billion roll out cost and 23 million h’holds) I’d be happy to take the money and pledge to provide my own readings every month.

Member

Malcolm – Perhaps the reason that I’m in usually in credit and you are usually in debit is that I’m a low energy user and you have said before that you are a high energy user. I would have hoped that the companies would take into account historic use in making their predictions. I will challenge e.on to do a better job otherwise I will be leaving them at the end of the contract.

I’m quite capable of providing my own meter readings too. Smart meters might help those who are struggling with their bills to cope better.

Member

Maybe when you’ve been in your new home longer you will have established a more reliable annual usage estimate, and can agree a realistic monthly payment. Whether you are a high or low user should not make a difference.

I’ve yet to see a persuasive argument in favour of smart meters, apart from accurate meter readings and possibly hourly charging at appropriate unit rates.

Member

If only accurate meter reading resulted in accurate billing. 🙁 I supplied meter readings for me previous home for years and the energy companies did not get any better at billing.

I would be interested in whether smart meters help reduce anxiety among those who are struggling to make ends meet.

Member
Peter cutmore says:
5 October 2017

You need to read your own meter and send in your reading monthly about the 5th of the month and certainly before the 12th as agreed with your energy supplier who will then calculate your bill on a month by month basis and if they do not agree to this change you should change your supplier for gas or electricity . We believe we get better value by having gas and electricity from one supplier. Keep your estimates to an absolute minimum. Keep on top of your bills.