Martin Lewis urged UK bill payers to ensure that their energy direct debit bills are correct - warning that people could be paying thousands more than they need to. Speaking on his podcast, the financial wizard explained that Ofgem has recently introduced "tweaks" to UK energy prices at the turn of the year.
It comes after the regulatory body upgraded their price cap from £3,549 to £4,279 as of January 1. Martin told listeners that for most people, it wasn’t going to be a big change as households are covered by the Energy Price Guarantee, but some have seen their energy costs increase by a "material amount" due to regional differences in the Ofgem price cap, as reported by The Mirror.
The MoneySavingExpert founder first explained how the Government’s Energy Price Guarantee worked and how much the energy bills for each payment method - direct debit, prepayment and pay on receipt of bill - have risen slightly. Martin then told listeners that it was "absolutely worth checking" if their energy direct debit was correct.
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He said he had received lots of questions from people who said their direct debit had gone up "significantly" and some by nearly double after the 27 per cent October rise and whether this was right or not.
He said: "If you are in debt, they may be increasing it to catch up on the debt because you were not paying enough, but if you’re in credit, the logic would dictate that your direct debit increase should be roughly in proportion to the price rise. If it’s 30 or 40 per cent, you’re in the right ballpark, but if it’s 50, 60, 70, 80 per cent, you want to check what’s going on.
"I would note that at this time of year, going into or just starting the winter, you would want to be in credit, that’s the whole point of the monthly direct debit cycle. It smooths out your usage, so you’re generally in credit when you go into winter and you’re in debt when you come out of it, but then in the low-use summer months, you start to build back that credit. That’s how it should work.”
He then urged his listeners to check particularly if their direct debit has increased by more than 40 per cent and they are still in credit. Martin also advised listeners to make sure they have a working smart meter, which automatically provides readings, or to do a reading themselves, to make sure they are getting accurate prices for their usage.
Martin's first step to check is to use an 'is your direct debit right' online calculator which should use the up-to-date January prices. All you need to do is input your annual usage and it will estimate what your direct debit should be based on this.
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