How energy firms charged households £132 extra
How energy firms charged households £132 extra over one of mildest winters on record to give themselves £1billion cash pile
Energy firms charged households £1billion too much for heating this winter, experts claimed last night.
Most bills should have fallen because December and February were the warmest since records began in 1910.
But, despite using less power, only two in five households saw charges fall; some customers overpaid by as much as £400.
Around eight million households on fixed direct debits are thought to be owed money. With the typical household £132 out of pocket, the power giants could be sitting on a £1billion cash pile.
Last night campaigners called on the energy giants to issue immediate refunds.
‘If customers don’t claim this money back it’s effectively free cash for power giants to fill up their huge profit pots,’ said Mark Todd of Energyhelpline, a price comparison website.
‘It will have been pretty obvious by January that it was an unusually warm winter.
‘At that point, it would have been clear to energy companies that customers were using less energy and they could easily have reduced their bills. But these are profit hungry businesses and they aren’t going to turn away cash.’
Around three in five households or 16million homes, pay their energy bills by fixed direct debit.
Suppliers examine previous consumption to estimate how many customers will spend over the coming year. The bill is split into monthly or quarterly payments.
High usage in winter is supposed to balance out low consumption in summer so that at the end of the year the customer breaks even.
But the weather this year meant households used less power than usual. Average temperatures were 5.5C – the warmest winter on record in England and Wales.
That left millions of accounts in credit but, under industry guidelines, energy firms can sit on the cash until their customers ask for it back. Mr Todd said the estimate that eight million homes ended the winter in credit were a conservative figure and the total could be much higher. Tom Lyon, of uSwitch, another consumer site, said: ‘Power providers must repay any credit on request. It’s in the rules laid out by the energy regulator, Ofgem. So now is the time to read your meter, update your account and reclaim what you’re owed.’ Some suppliers automatically refund credit balances once a year.
But the exact refund policies and amounts vary. Fran Woodard of Macmillan Cancer Support said that vulnerable people have been the most severely hit by the overcharging.
‘People going through cancer treatment are often at home more and need to turn the heating up to deal with side effects such as weight and hair loss and circulation problems, all of which can make people feel colder,’ she said.
‘‘This all means that their energy use goes up while their income may be reduced.’
Power companies have already come under fire for failing to pass on rock bottom wholesale prices to families. The oil price tumbled nearly 5 per cent yesterday to $41 a barrel after talks between the major producing nations stalled. They were trying to reach a deal to cut output after allowing prices to fall by almost 70 percent since their 2014 peak.
Power suppliers can boost their profits by keeping prices high while costs fall.
British Gas, which has 6.8million customers, saw its profits rocket by 31 per cent to £574million last year. Scottish and Southern Energy, Britain’s second-biggest power firm, almost trebled profits to £101.5million in the six months to the end of September 2015, its latest reports show.
British Gas has cut prices three times since the beginning of 2015. In January it lowered gas tariffs in line with other Big Six providers, announcing a 5.1 percent decrease from March 16.
But consumer groups argue that prices are still too high. Wholesale gas prices have fallen by 40 per cent since 2014. Electricity prices have dropped by around 30 per cent.
British Gas’s parent company, Centrica, admitted yesterday that it lost 224,000 accounts between December and March as customers sought a better deal.
Added Tuesday 19th April 2016