Energy bills are showing no sign of decreasing as the UK battles to cope with the cost of living crisis. Inflation has skyrocketed to a record seven percent following the coronavirus pandemic and the war in Ukraine.
Energy regulate Ofgem has also just announced that UK should update the price cap on energy bills every three months instead of twice a year to help households. The energy price cap rose by 54 percent on April 1, leaving customers having to deal with massive increases in their energy bills, with some paying more than double for their gas and electricity.
An investigation launched into claims firms are ripping off customers through direct debits was announced last week by Business Secretary Kwasi Kwarteng. Ofgem chief executive, Jonathan Brearley, confirmed firms are seeing “bad practices”, in order to ease cashflow problems, as businesses pass on the rising energy costs to consumers, reports the Express.
Read more: EDF warns customers about severe impact of double energy price rise in October
Data specialist Anita Dougall, an expert in the energy industry, has shared her thoughts on the energy bills hike and the impact on direct debit payments. Anita explained the energy industry is currently suffering from a “lack of data maturity”, which is a stumbling block for transparent and fair charges.
According to the expert, this leaves energy firms without sufficient visibility over their customer's information as they set direct debits. When asked why consumers are being exposed to unreasonably inflated direct debits, Ms Dougall said: “There are many factors at play, but lack of visibility is a big one which is often down to a lack of data maturity in the energy sector."
She added: “Many suppliers set Direct Debits based on decisions made about groups of people and averages, rather than on the individual customer and their actual consumption, which is a recipe for inaccuracy”.
The expert, who is the CEO and co-founder of data company Sagacity, explained that “without a joined-up view of customer data, suppliers can’t personalise direct debits”. And she added: “This means most customers are either over or under paying.”
Elaborating on the situation which leaves many vulnerable customers unable to pay their bills, she spoke of “data silos”.
She said: “Many energy suppliers are hampered by data silos, with crucial information locked away in legacy systems.”
Ms Dougall stressed the importance of customers insisting on providing their suppliers with as much data as possible, particularly with the use of smart meters, in hopes of avoiding a “bill shock”.
She added: “Having a smart meter can help customers to avoid bill shock, as they have ongoing visibility of their usage. When suppliers don’t have a recent meter reading, they will make decisions based on estimates, which are often higher than actual usage – especially if you have been making an effort to reduce your energy consumption.
“This may lead to people receiving bigger bills than they were expecting. By giving your supplier as much data on your usage as possible, you make it much more realistic for them to give you accurate bills, keeping direct debits realistic as we face up to the next energy price cap rise that is looming on the horizon.”
