Energy firms warned over hiking direct debits

Desk report: The government has warned energy firms not to hike direct debit payments for customers who are making “huge efforts” to cut usage.

The business secretary has written to suppliers asking them to ensure bills reflect what homes are actually using, and do not over-estimate charges.

Grant Shapps said he was concerned by reports that bills were rising despite people cutting back on energy use.

Regulator Ofgem has been asked to look at making billing “more responsive”.

Ofgem said it had already called on firms to address the issue, but would be prepared to take further action if necessary.

Direct debit is the lowest cost method of paying energy bills, but can lead to overcharging, because suppliers calculate bills according to a customer’s previous consumption and spread charges for higher winter use over the year.

Ofgem said a review conducted earlier this year identified “moderate or significant issues in a number of suppliers” and that it had taken up the issue with energy companies.

But last week, The Times reported that some customers, including those on a fixed-rate tariff, had seen their direct debit payments soar even though they had reduced the amount of energy they use.

Energy prices have been rising, due in part to sanctions imposed against Russia, a major oil and gas producer, following its invasion of Ukraine.