Energy direct debits

Many thousands of people across the UK have had their energy direct debits hiked in the last few months, sometimes by as much as two or three fold. Yet often it seems the increase bears little or no resemblance to the increased cost of gas and electricity.

Worse still, many providers WON'T lower the payments without a fight, even when it's obvious you're overpaying enormously.

The price and what you pay aren't the same

The reason this can happen is the difference between the price and what you pay.

• The Price. Power costs are set by suppliers, usually with a daily 'standing charge' plus an additional amount based on energy used measured in kilowatts/hours. So the lower the rate and your usage, the less you owe.
• What you pay. With MONTHLY direct debit, the company estimates annual usage and then divides it by twelve so you pay that each month. Thus with low summer use, you'll usually build up a credit, but this'll be needed for winter months.

The problem is, some bills don't follow this logic and are massively overestimated, as if providers are making the figures up as they go along. What's more, overpay and you'll often have to wait until the end of the year to claim the cash back, whereas underpay and the difference has to be made up straight away.

Do note; QUARTERLY direct debits are different. There you pay depending on what you've used, but the price is then higher.

Fight back NOW

The most important thing is to always do a meter reading. If you don't, it's tough to argue what a reasonable charge is. Assuming you do that, if you're heavily in credit, ask for your money back.

Then it's a question of starting to negotiate and demand an explanation as to why your debit's been pumped so high. Better still send a quick letter explaining it should be lowered.

For a full step-by-step guide to this, including free template letters to send to your provider, see the "Unfair Energy Direct Debit" guide in the 'useful links' section. It also explains how to take a case to the Ombudsman if all else fails.

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