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Why does my energy company hold onto my money?

The other day I got a nice surprise when my energy bill arrived in the post, and found I’m in credit by £100! Great, but if I’m in so much credit, why is my money sitting in my energy company’s bank account?

I’m not the only person asking this question. Which?’s executive director, Richard Lloyd, is on Radio 5 Live all week talking about consumer rights, and on Monday a listener raised this precise issue.

Give me my money back!

So what can we do about it? Well I thought that one option would be to phone up the energy company in question and ask them to give it back. It wasn’t that easy.

They explained that the £100 I had in credit was only partly refundable because, although my gas bill was up to date, I hadn’t been billed for electricity since April. Confused? I am.

So I paid £66 on my last bill, submitted two meter readings shortly afterwards and got a statement saying I’m over £100 in credit. Wouldn’t this suggest that I paid too much on my last bill and that, not only should I get a refund, but they should also adjust my direct debit?

Well no, not according to Michael, the customer service rep who explained four times why this wouldn’t happen. I still don’t understand the reasoning. Perhaps it will all become clear when I over pay again in October?

Why’s it so complicated?

But should we really have to go to so much hassle? A colleague of mine at Which? was also in credit a few months back and the energy company simply paid back the amount without him even having to pick up the phone.

I accept that when paying by monthly direct debit, there needs to be a certain amount of flexibility – since you’re likely to be in credit after the warm summer months and in debit after a cold winter. These payments should balance out in the end. And I also accept that it’s our responsibility to make sure our meter readings are correct, by informing our energy provider every three months.

But it looks like energy companies have far too much leeway to arbitrarily decide what their policy is when our accounts are in credit. For instance, British Gas automatically refunds you when your £200 in credit, compared to E.ON which does so when you’re only in £5 credit.

At the end of the day, most of these companies will simply return the money if you ask for it. But should we have to when it’s our money they’re holding on to? After all, what would you prefer; money in your bank account earning you interest, or in your energy companies’ coffers?

Sophia says:
28 January 2015

I’ve overpaid by £130 in only 7 months, wish they would just charge me for what I used, they put my bill up 2 months ago by £30 when I was already in credit. It’s very nice of them to arrange my finances for me like that but actually I’d rather pay what I owe not what they think I might possibly owe in the future is I use more energy when it gets colder! Eon are the worst for this sort of thing and they weren’t very helpful when I rang them to complain about it either

Sophia – I had this problem for years when I was with e.on. I called them frequently to say that I had a large credit balance or to reject their proposal to put up my direct debit when the current payment was obviously adequate. On several occasions, the person I spoke to said I was quite right to point out that e.on had obviously made a mistake. On every occasion that I called, e.on was helpful, but no-one managed to stop the same thing happening some months later.

I eventually got fed-up and prompted by the offer of a collective switching scheme I switched to Scottish Power. Switching was a nightmare and I had a few telephone discussions with SP. I took the opportunity of saying that I would leave after the year’s contract if they played the same game as e.on. I was told that it was the company’s policy to let customers build up a credit balance in the summer months to avoid going in to debit due to greater use over winter. Like you, I just want to pay for what I have used, which should not be difficult with direct debit.

I’m pleased to report that SP are managing my account much better than e.on and I have not had to contact them once to ask for a refund or not to unreasonably increase my direct debit. On the other hand, Beryl, who is one of our Convo regulars, is leaving SP because they are holding too much of her money.

Ofcom know about this problem for years.

We have been with E.On for just over two years and feel that their charging arrangements are reasonable and not as bad as they had been in the past. Perhaps having our contract starting in december meant that we were on a better basis from the outset.

Having said that, although every review does seem to generate a reduction in the monthly direct debit charge that is then followed some weeks later by a correction upwards implemented a couple of months afterwards. I wish the predicted consumption analysis could result in a smoother payment profile but at least I have never had a shortfall and, when I have had a high credit balance, an automatic refund has come through very quickly. I think it is very difficult to get it spot on given the ups and downs of the temperature [last winter was particularly mild], the effects of energy saving measures we are continuing to exercise, the periods we have been absent, and the changes in prices. It remains possible to pay for exactly what has been consumed in each period by having a paper bill and making a cheque or bank payment; there is a penalty for doing this which might cancel out the advantage. In the way of these things this is not regarded officially as a charge but as a discount for which the consumer is not eligible. I wonder whether Ofgem have examined the realistic additional costs to energy suppliers of classic billing over paperless billing and determined that the differential is fair. My view is that the discount [or penalty, whichever way you look at it] has been pitched too high to serve as a marketing incentive because of the various customer retention benefits that ensue. People who do not receive a paper bill and have automatic deductions from their bank account might be less inclined to review their position and investigate alternatives than otherwise.

From what I have read on this site there seems to be some inconsistency in the way that e.on treats customers. Every time that I rang them (and their predecessor Powergen) to complain about excessive credit and unnecessary increases in my direct debit, they did what I asked them to do. Others have been less fortunate.

It seems a bit odd that there is no opportunity to pay exactly what you owe by direct debit and be rewarded by a low price.

I can understand why paperless billing does not suit everyone, but being able to turn up past bills on the computer suits me and encourages me to actually look at what I am being charged.

wavechange, I imagine that changing your DD every month would involve extra costs that the companies shareholders wouldn’t be happy with.
The costs could include needing to get a reading Every month, sending you notice of the change in DD several days before it is due each month (a legal obligation), checking your reading appears to be within a likely correct range (every month) if you do a self-read, etc etc
All these things require computer time, and possibly human time, and when multiplied by thousands of customers wanting this service, it would make a dent in the shareholders dividend (obviously a capital sin).
I prefer to pay the same amount every month, as it enables me to predict what I will need to set aside for bills for a 12-month period.

Hi Mark – It’s a while since I posted that comment. Here is some information on the Which? website: https://www.which.co.uk/reviews/cutting-your-energy-bills/article/how-to-save-on-your-energy-bill/how-to-get-the-best-energy-deal#pay It says that it can be cheaper to pay by direct debit, and that is my experience.

My direct debit has not changed every months, perhaps two or three times a year. At the moment I’m with Ovo and they let me set my DD online. I see that I’m £2.44 in credit today. They can see what I’m using because I have smart meters, but submitting monthly readings is just as good. Other suppliers have pushed up the direct debit occasionally and I have had to phone up and get them to change it, and they have always obliged. The energy suppliers take care of changing the DD and there is no need to contact the bank.

One supplier did tell me that they prefer customers to build up a credit balance during the summer months to cover higher winter bills. Paying the same amount each month may suit many customers but I would prefer surplus money in my account rather than theirs! I suspect that the reason that companies prefer DD payments is to avoid the hassle of dealing with customers who don’t manage their accounts and get into the red.

I have variable direct debits on a couple of monthly accounts, one a store account and the other a credit card. My water and telecom bills are also paid that way. It does not seem to cause any problems for the creditors and I see no reason why energy firms cannot provide a similar facility, especially for those with smart meters or providing a monthly meter reading; even estimated bills can be collected in the same way.

I think its a question of whether your credit balance is right for your particular circumstances, e.g. the season (time of year) and the amount you used (making allowances for temperature differences, prices increase etc.) at the same period last year. It would be near impossible for both the energy company and consumer to determine the exact amount of individual usage, but energy companies do like to keep your account in credit for reasons that are patently obvious. I wouldn’t have thought a credit balance of £130 in January would justify a refund but I am not in a position to know Sophia’s own circumstances and monthly instalments. I made my complaint when my credit reached over the £500 mark in October last year, which has now been reduced to a reasonable sum.

The good news is NPower have automatically sent a refund and reduced my sons monthly DD’s upon submission of his meter readings. The pressure from Ofgem must be having some effect given that NPower have a reputation of being one of, if not the worst offender for customer service.

Lucy says:
30 January 2015

Recently I noticed I have been overpaying on my direct debit to Scottish Power for gas & electricity. I called them with up to date meter readings and they advised me I was in credit in the region of GBP1000, one thousand pounds. As a single mother of a 6 year old working every hour and barely making ends meet I naturally asked for the money back You might think this is a straight forward refund. No. I have made endless phone calls each time being told a different tale. Passed around, promised this promised that, the computer says no, it has to be validated. Now they are telling me it will take 28 days to return MY money. They have not yet even confirmed that the process of returning the money has begun, so 28 days from sometime whenever they get around to doing it. It is wholly and morally unacceptable to hold on to peoples money in this way. Energy companies are the new Banksters. I wasn’t thinking to switch but I am now or do they all treat their customers this way?

I think it is disgraceful that SP allowed a customer to get into the position of building up a credit balance of £1,000. Surely they have a periodic review process that is supposed to identify such situations? Personally I think you are entitled to have nearly all of that back immediately, never mind 28 days. An ex gratia sum for bad customer service and loss of interest on your money would be appropriate too. Presumably you have cancelled any further direct debits until this is rectified. There must also be a way of escalating this to a higher management level.

There was a time when the gas and electricty boards had premises in most towns where you could go and sort out things like this face-to-face. After privatisation they all shut down and customer service was replaced by anonymous call-centres. When you can look somebody in the eye, stay calm and polite, and show them the documentary evidence you tend to get a better result than when trying to wrangle with a different person every time at the end of a phone line, especially if they’ve also kept you hanging on for an inordinate period.


Phone them again and if you are able to record your conversation and tell them that you are doing so as evidence and that you require £xxxx transferred into your account within the next 10 days or you will refer them to The Ombudsman. You need to let them know the exact amount you require and It may help if you are a member of Which? to let them know that you are. Its very important to read your meters before any contact with them so that they can deduct any outstanding balances on your account. If you are not on a fixed tariff tell them of your intention to switch to another provider as soon as you receive your refund. Good luck!

Switching is always an option – to get better service or lower prices. But my experience, as well as others who have posted, is that they all seem as bad as each other at returning your money, even the smaller suppliers.
It seems the best recourse is to the ombudsman, meanwhile we should all sign the petition mentioned above, to try to get some legislation in place to limit what amounts to theft.

Mike Rea says:
6 February 2015

Been waiting for a refund of £12,000.00 from British gas since July 2014.

Each time we contact them they say the cheque has been sent to us .

When the cheque didn’t arrive (surprise ,surprise) they promised a direct transfer into my bank account.
The last conversation was, they promised they would make the payment direct into our bank the following morning and call me back.
Got no phone call and no payment .
Called them back and got the runaround as usual.

Despite several more phone calls and promises ,I am still waiting for my refund !

I have been with the same supplier since 1965 and our current bill is about £1,500 a month .

Seems they just crap on their customers and perhaps then wonder why we go elsewhere .

British gas has now become an appalling company and I for one will be dumping them for another supplier.

If this is a credit you are owed for overpayment, have you stopped making further payments? That might be a good starting point. It is not clear how your £1,500 a month energy bill relates to your consumption. Changing to a new supplier might be tempting but there have been many comments in Which? Conversation that this often adds further delays to getting your money back – get your refund before you switch. I think you’ve gone past the point where phone calls will get results – you need to send a formal claim and keep escalating it.

holly owen says:
6 March 2015

I have had 145 on my meter key can i get cash back off my key in a post office ? Im grateful but confused ? With Scottish Power help ? TYIA

C.wright says:
18 March 2015

I am with Npower I was £705 in credit after numerous calls I was told I can only have £450 of it back and they also wanted to reduce my monthly payment from £79 to £46 but I asked for it to stay the same as looking at their predicted figures for twelve months it seemed sensible so they agreed ,six months later I received a letter saying they want my monthly payment to go £115 so I phoned up and asked why,they said I am in debt of £435 so I said how can that be with the £255 in credit and 6 payments of £79 equals approx £729 plus what is in debt £435 equals £1164 for six months ,only for them to tell me ,because we were in credit they STOPPED our direct debit without telling us how can this be ,we never noticed it not going out .

Kirsty! says:
25 March 2015

Looking for some advice please! I’m currently with EON for my gas and electricity on prepayment meters. I have recently reviewed my account online and it states I am £313.19 CR to my electricity meter. It says my gas charges are £134.73. does this mean I am elgiable to claim the rest of the money I am in credit? Thank you for any advice or support!

Looks like you need to speak to E.On – pre-payment meters with cards or keys can be quite complicated with credits and debits [possibly due to standing charges] accruing, and its far from simple to work these things out on-line. It might be possible to nett the electricity credit off against the gas bill but whether or not you will get the balance back might depend on the scheme you are in. Somehow I expect you will need to top-up your gas card or key to clear the debit in that account but presumably you won’t be able to do that until you get back the overpayment for electricity. Do call them – and best of luck.

Skeletor says:
23 April 2015

Im with EDF, told last decemeber they owe me money as they ripped me off by over charging me for several years on the CV value on my metre. Asked repeatedly for info on how they worked out my refund and have no clue to this day how they came up with it. Thats not my big issue though, EDF even now have NOT GIVEN MY MONEY BACK! Ive launched a complaint with em and the deadline is now just 4 weeks away, edf have my money from an error they caused for years not i and yet they hold onto my cash regardless. Looks like ill be going to the ombudsman as edf wont give me my money that they ripped off of me with the wqrong CV on metre so ill be seeing them in court me tinks!!! keep my money will ya edf??? a court will stop that farse!!

WackyJacky204 says:
17 August 2015

Today, I realised two months after submitting final meter readings (moved out) £150 energy bills DD was still being taken from my bank. Sorted that out, over £1000 in credit (why have they not already refunded…..I have held my account for a year to date). They tell me, 28 working days (working days are Monday to Friday remember…..over 5 weeks!) until I get it back! I challenged, they blamed the bank. I challenged again, being a frequent user of electronic banking, I know payments are faster than ever….they whizz down the wire! I was then told, that’s how long it takes for them to audit?! What is to audit, final meter readings provided. I have overpaid. Done deal?! So Spark Energy…if you want to survive in this competetive energy market, I suggest you improve your customer service! Very disgruntled customer!

I’m £1500 in credit with edf and they won’t pay it back. I rented out my property for a few years, but edf continued to take the money out of my account. When I noticed I stopped the Dd. I’ve sent them the tenancy agreements of the tenant, who hadn’t paid any bills! They have continued to leave the account in my name so all the debt is on me! They claim I called them whilst the tenant was living there about this direct debit, but I didn’t. So they refuse to pay this back. What do I do?

I can see First Utility’s point about asking back your credit in the summer months when of course come winter the account could be in debt and the direct debits from your bank wont cover the amount.
However I have completed my full years contract with them and am already well into the second year. I can see quite easily from my account bills and payments that I was in final credit of about £233.
Why are they hanging on to my money?

Veronica Butcher says:
23 November 2015

Dont ever use Extra Energy – awful customer service – rang to close account March 2015 – 6 months later after many phonecalls and ignored emails I finally managed to get a final bill sent out and was promised a refund of over £1400 on or around 9th November 2015. It didnt arrive so I rang to ask why and was told they would look into it and ring me back the same day – they didnt – rang again and was told it could take another 6 weeks for it to be signed off – I have complained to a manager and sent numerous emails and had no reply. They dont tell the truth, they dont call when they say they will, they dont answer emails and I am still owed over £1400! Extremely disgruntled customer!

I have just left Extra Energy too. Useless put my Direct Debit up on the first month of switching. Asked why got told all okay and would even out. At this point if I’d switched would have charged me to do so. Then I went £840 into credit and they actually increased my Direct Debit! Fuming after numerous requests to get my money back, they finally agreed 3 months later. BUT stated in doing so would have to increase my Direct Debit even more! Why? I was in credit, clearly paying too much already! So I cancelled my DD only to be told it would affect my credit rating and they would charge me if I had to be contacted to reinstate again! I phoned told them exactly how disgusted I was and that I was leaving and no they wouldn’t be charging me. They then put me onto their standard rates because I was no longer paying the DD. Had an email saying would be a daily standing charge of 23.54p, yet on the account have put 54p. I have left and I’m still awaiting my final bill and credit to be refunded. Disgusting treatment, it’s my money and I don’t think they should be getting away with this! Steer clear people.

Neeraj Pandey says:
26 November 2015

I’ve been a first utility customer and switch to Southern over a month ago. New provider has fully taken over my account including payment by direct debit. First Utility generated final bill 2 weeks ago and I was in credit by £533. I haven’t seen this money back in my bank account yet. I phoned First Utility to find out and shockingly they suggest their process to refund the money can take upto 28 days. I asked if they know how far in the process this is currently sitting but they wouldn’t tell. This is completely unacceptable.

Extra energy hadn’t produced a bill for me in over 2 years but despite this still continued to take £168.00pm when I inquired I found I was roughly £1000.00 in credit. I took this up with them in September this year and still to date haven’t been paid back the amount. They have told me its with the Director of operations for sign off because its a large sum of money? despite their turnover per year! I have told them the Ombudsman has taken this case up and the will be contacted as has Citizens advice. They still don’t seem to really care or have any urgency about returning my money. If they keep approx £200.00pp how much are they holding in their accounts? Approx 220,000 customers x 200.00 !!!! No point in having lower energy bills if the saving is stored in their accounts, probably how they are able to offer cost savings over the other suppliers as they get the difference back in interest!

I am in credit with eon on my electricity prepayment meter for £313 and gas prepayment meter for£77 and yet they are saying that they have to send me a new statement which will actually state whether I am in credit or not? Has anyone else had the same issue and received their refund?

Andy says:
7 May 2016

First Utility failed to bill me for 8 months, then, upped the agreed DD amount to compensate… on carers money you can’t just do that. I complained, an agreement was reached (in writing by the way.) A year on while still caring, they did it again, and without notice raped my bank account without my knowledge, taking way more than I had coming in on carers allowance, and my attention was elsewhere. When mum died, and dad the day before her funeral I went to the bank to start the estate probate will arrangements, and there was close to nothing in it, FirstUtility close to took the lot… even after having circumstances explained to them in painful detail – disgusting, there are no suitable words for the disdain I hold for this company.

I switched to GBEnergy and now pay 4x LESS than through F.U. who I had to agree to pay the remaining sum off at £10 a month. I came to the end of that payment, and rang up to close the account, only to have them insist I pay a further £36. It’s not on the bill, and frankly I refuse to be bullied. I’m prepared to take the printouts to court if they see fit to try. Disgraceful company, should be avoided by all sane people everywhere… don’t be taken in by their lure’s of low cost energy – you will be made to pay for it later, by staff with zero compassion for your circumstances and close to no clue what they are doing; people working for them should feel shame for every person they screw over.

Angel says:
5 October 2016

I switched from SSE to Npower. Gave last metre readings for both Elec and Gas with SSE – I owed them for Gas and they owed me for elec, yes they took the payment for the gas, but did I get the £200 they owed me for elec – answer no. I phoned up, they cant understand the problem and will look into it – this is a credit owed from 8th Aug, it is now 5th Oct!! They know what they are doing, as the words at the bottom of the elec statement states ‘Please don’t cancel your direct debit before then or your refund will be delayed’ Now they are saying I cancelled my direct debit – well, I didnt as how would they be able to take the gas amount due? Also, if I had not of noticed, they would still have my money. I can sort this out, but how will vulnerable people cope with this? These companies need to be investigated and fast.

Cheapest Energy suppliers ? Good customer service should come into things as well OVO pays interest on your money held by them maybe not the cheapest but that little interest paid helps me stay with them plus I always get prompt customer service

That’s great to hear! Ovo were rated top in our annual energy supplier survey – and seem to high level of customer service 😀

Companies of all kinds always delay paying for as long as they can Nothing new it’s being going on for many years They hope you will forget about it

This comment was removed at the request of the user

I’m owed £ £708 by eon – I rang a week ago still not got checque, rang today says checque has to be sanctioned then told I couldn’t evevv have £500 or they’d put my payments up, I was going to leave over 200 on my account, I was in tears this morning now someone e will ring me mon ad they say my gas is in debit,which ch it isn’t,I just don’t know which way to turn

Hi Meg,

I am really sorry to hear you are in this situation. I can imagine how worrying and upsetting this must be. This is something our Legal Advisers at Which? Legal can help you with. If you are a member please call us on 01992 822 828 to book a callback. If you are not a member, do not worry. Give us a call and we can tell you about our service and how it can help.