Martin Lewis appeared on This Morning to answer energy questions on Wednesday and shared some top advice for anyone who has received details about their new monthly direct debits, especially if the amount is more than Ofgem’s 54 per cent price cap.
Presenters, Dermot O’Leary and Alison Hammond, put the questions to the financial guru via video link from the studio to his home.
Sarah contacted the ITV show to say she is an EDF customer and her new energy bills seem “extortionate” and that she was braced for a rise, but received an email to advise her that her new monthly direct debit had doubled.
Sarah wrote: “My new energy bill seems extortionate, I’m an EDF customer on a cap plan and I’ve been paying £206 monthly and I was braced for a rise but received an email advising my new monthly payment had doubled to £412.
“This is more than the price cap, I need help, what can I do?”
Martin responded saying there are three reasons why a direct debit may have gone up by more than Ofgem’s 54 per cent price cap rise.
He explained: “Number one is if you were on a fix and that fix ended, because that would have been cheaper than the price cap - but that doesn’t apply in this case.
“Number two, you have moved to a fixed rate and not to a price cap rate - just double check that hasn’t happened because some energy companies have been pushing it hard and you might not have realised that the offer they gave you was an offer as opposed to a compulsory thing that you had to do.
“Check if you’ve moved to a fixed rate tariff as opposed to a variable rate tariff as they are far more expensive.”
But the founder of MoneySavingExpert.com explained that the third reason, and the most common reason, for your energy bill being much higher than the price cap, is because your estimate has increased.
However, Martin shared a couple of things to do which could bring the direct debit costs down.
He said: “The first thing you need to do is make sure you’ve done a meter reading, because that’s the way your estimates are best-based and then check whether you’re in credit or in debit.
“If you’re in substantial debt then it’s probably because your direct debit was under-estimating your usage and it’s fair.
“But, if you’re in credit or about balanced at the moment because we’re moving into summer so you should roughly have no credit, no more than a month either side, then if they put your estimated usage up by more than 54 per cent, you need to get on to them and ask why.”
The consumer champion went on to explain that under energy firms licence conditions, their licence says that they must give customers a “fair direct debit” that reflects their usage.
He said energy customers have a right to get in touch with their supplier and ask why their bill has increased so much when they are in credit.
He added: “If they can’t justify it, ask them to bring it down and if they don’t bring it down, make a formal complaint and go on to the energy ombudsman service.”
Martin also said that if you’re currently in credit, you shouldn’t be going up by more than 54 per cent, if you’re moving from one price cap tariff to another price cap tariff.
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