Under proposals being considered by ministers, energy companies would be forced to return millions of pounds held as a surplus in customers’ accounts, as households brace for another bill hike.
Costs are expected to rise by around £500 per year, despite regulator Ofgem lowering its price cap on Monday, as ministerial support for energy bills declines.
With effect from April 1, Ofgem is lowering its cap – the amount suppliers can charge – from £4,279 to £3,280 per year. However, the average household’s contribution to the government’s “energy price guarantee” is set to rise from £2,500 to £3,000 beginning in April.
Despite the cost-of-living crisis, suppliers have been accused of hoarding billions of pounds in consumer cash as account surpluses, prompting a former Ofgem board member to accuse energy companies of having a “metaphorical hand” in customers’ pockets.
Now, energy minister Amanda Solloway has said that MPs will consider requiring automatic repayments on account balances, which could result in millions of pounds being returned to customers.
“Suppliers should not be sitting on money that isn’t required to pay for the energy that a customer is using,” she told lawmakers.
Monthly direct debit payments have increased in tandem with the rise in the cost of electricity and gas. At the same time, many customers have amassed a surplus, which they claim has been difficult to recover.
Last month, Energy Secretary Grant Shapps revealed that he, too, had been affected, saying, “I’ve had the experience myself where the energy company just arbitrarily decides to put an outrageous figure into the direct debit.”
According to Ofgem, automatic repayments could return up to £1.4 billion to customers by 2021. If the funds were distributed to 21 million households, the average would be around £65.
But as energy prices have soared, reports earlier this year suggest the amount being held in energy accounts has swollen to between £2 and £9 billion.