Commons Sense

House of Commons · Westminster Hall

Energy Suppliers: Customer Credit

22 February 2023 · 5 other contributors · 10,310 words

Opened by Drew Hendry SNP Inverness, Nairn, Badenoch and Strathspey

Responding minister: Amanda Solloway

Energy

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Drew Hendry raised concerns about energy suppliers: customer credit in Westminster Hall. A government minister responded.

Key points

  • Concerns raised about energy suppliers holding customer credits without accountability and returning them automatically.
  • Constituent Mrs Frances Raw faces a monthly payment request despite having a credit balance.
  • Minister acknowledges Ofgem's efforts to tighten licence conditions and address excessive credit balances.

Key requests to Government

I ask for Ofgem to take action against companies that use customer credits improperly, mandate direct debits to account for existing credit balances when billed out, and ensure that energy companies print credit amounts in green at the top of bills with clear notices about customers' rights to their money. I ask for a clear printed credit balance at the top of bills so that consumers can understand their financial situation better. We also need plain language billing and an improved system for handling direct debits.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Drew Hendry SNP Inverness, Nairn, Badenoch and Strathspey

I am concerned about the manifest injustice of energy suppliers holding customers' money in credit without accountability. I have received numerous complaints from constituents regarding billing issues, long wait times on customer service lines, and inaccurate meter readings. One constituent, Mrs Frances Raw, has been asked to pay over £236 a month despite having a credit balance of £1,796.36. The practice of energy suppliers retaining customer funds without explicit permission is not acceptable; it is the customers' money and should be returned automatically. I am concerned about the failure of Ofgem to address issues faced by energy customers regarding their credit balances. Constituents' money is being held captive, and people face difficulties in accessing their funds due to inadequate helplines and non-transparent billing practices.

Other contributors (5)
  • Alan Brown SNP Dumfros and Galloway

    The market's billing process and switch supplier mechanisms often fail customers, as seen in a case where inaccurate billing led to a significant bill upon switching suppliers. Mr Brown commended his colleague for bringing forward the debate and highlighted issues such as constituents being afraid to use their credit balances due to rising energy costs. He cited an example where a prepayment meter user put £700 on their meter out of fear, yet was not contacted by their energy company. Mr Brown also mentioned that 66% of people engaged with the Wise Group experienced mental health issues related to energy cost worries. He urged Ofgem to clarify credit balance figures and called for transparency in reporting. He raised concerns about companies potentially gaming the system by increasing direct debits when Government support was expected, and criticized the former Chancellor's laissez-faire attitude towards market failures. Welcoming the Minister's comments on automatic refunds, it is noted that Ofgem currently lacks requirements for energy suppliers to return credit balances within a specific timeframe unless an account closure occurs during switching.

  • Alan Whitehead Lab Southampton, Test

    Condemns the practice of energy companies using customer credit balances for their business models and calls for Ofgem to enforce stricter measures. Notes that £9 billion was likely in company bank accounts and that 28 energy suppliers went bankrupt between mid-2021 and summer 2022, with many relying on customer funds. Calls for Ofgem to implement proposals such as restoring credit balances to zero at the end of each contract year and ringfencing customer account balances.

  • Angela Crawley Lab Wansbeck

    The hon. Lady is exactly right; the energy companies are behaving unjustly by holding customer funds and this practice should be stopped.

  • Margaret Ferrier SNP Rutherglen and Hamilton West

    Customers report difficulties in obtaining their credit back, highlighting the need for Ofgem to enforce stricter rules on energy suppliers. The current rules apply only when accounts are closed.

  • Patrick Grady Lab Glasgow North

    Customers paying by prepayment meters often pay higher premiums and standing charges, which is an injustice for those who can least afford it. The energy companies earn interest on credit balances built up by direct debit customers. Patrick Grady highlighted the disappointment with smart meters and direct debit models, noting that customers are often left confused by readings and unexpected adjustments. He raised concerns about prepayment meter users whose money is being used for company purposes rather than held as a balance.

Government Response

Amanda Solloway

The Government welcomes steps to increase customer awareness and engagement, ensuring suppliers do not build up excessive credit balances. Ofgem has tightened licence conditions to reduce the likelihood of such issues. The Minister acknowledges the importance of accurate meter readings, particularly through smart meters, and notes the challenges faced by elderly customers in accessing these services. She commits to looking into inconsistencies with apps and direct debit arrangements. Ofgem is taking formal compliance actions against 12 suppliers and has secured several supplier improvements regarding credit balance arrangements and staff training. The reforms will ensure that suppliers do not gain a financial advantage from holding customer credit balances, protecting consumers when energy suppliers fail.

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