We all expect energy bills to rise as the price cap skyrockets on April 1st, but if your supplier demands a monthly payment that’s double or triple what you’re used to, maybe you can do something.
That’s according to Money Saving Expert’s Martin Lewis, who explained how to tackle unfair hikes in gas and electricity direct debits. He said people who currently have credit with their energy supplier might have a chance of paying less monthly than what suppliers initially charge.
In a video on his popular website, the consumer champion described how some people might be able to discuss the monthly amount they pay.
READ MORE: Martin Lewis warns of 3 things we all need to do by Friday as energy price cap rises
Of course, this will not reduce the price of your energy or mean that you will end up paying less for your energy. But with a tight budget for many people, that could mean avoiding high monthly payments that leave money you can’t use building up in your energy account.
And that won’t be possible for everyone. Your direct debit could increase by more than 54% because you were on a cheap fixed price that ends, which was well below 54% under the new price cap, so it makes sense that your direct debit would increase further.
Or you may have bet on a fixed rate, which is above the price cap, in the hope that it will dampen future price increases. But for some, a huge increase in monthly payment might just be unfair.
Martin explained: “[Y]You would expect your direct debit to increase roughly in proportion to the rate increase, so for people on the price cap, it’s about 50%. Now some companies might say, “We’re pretty sure it’s going to go up in October, so we’re increasing it [your direct debit] in advance.’ I don’t think this should happen and would love to hear specifics if they tell you that’s why they do it.
“But here’s the thing: it’s a consumption estimate. Now, if you’re currently in energy debt, so you normally owe money, that may well mean that estimate isn’t big enough. So it’s legitimate for them to increase that in addition to the rate hike.
“So if it’s going 100%, if it’s doubling, and you’re generally in energy debt, it’s probably relatively legit – you can do the numbers if it’s out of proportion. But if you’re in credit, then it’s very hard to see why your direct debit should increase by anything out of proportion to the rate increase. So for someone on the price cap, again, it’s 54%.”
For those on credit with their energy supplier, he recommends complaining if your bills face a disproportionate rise.
To do this, take an up-to-date meter reading and contact the company, politely asking why the direct debit is increasing so much and explaining that you think a lower payment would cover you.
He said: “If they don’t agree and you think the amount you’re being charged after hearing the explanation – and always do it politely because the call center reps have a hard time right now – then I would make a formal complaint and ask them to reduce the direct debit. If that doesn’t work, take them to the Energy Ombudsman.”