Energy credit that is automatically returned as part of new plans


Households that pay their electricity bills by direct debit pay the same amount every month based on their estimated consumption. That means, you As a rule, build up a credit in the summer when the energy consumption is lower and use this credit in the winter when you are using more energy.

However, research by Ofgem found there were £ 1.4bn in balances as of October 2018 fears that some suppliers may use customers’ excess cash to fund otherwise unsustainable business practices, such as: B. offering tariffs that are too cheap.

The regulator has therefore proposed an auto-refund policy that requires suppliers to repay a balance of over £ 0 each year on the anniversary of the contract. This means that households can receive a discount every year, but this depends on their energy consumption and the amount of the upper limit for the implemented credits. Please see below for more information. Use our Cheap Energy Club to see if you can save hundreds.

Credit can also be limited

While the auto-refund proposal would prevent excess balances from growing year over year, it would not prevent potentially high loan levels from building up in the meantime. To remedy this, Ofgem has also proposed introducing a credit cap, although it is not yet known at what level this should be set.

The regulator says this will help reduce the amount that will be held if a supplier goes down. In this scenario, the new supplier is responsible for repaying loans to customers. As we recently reported on Scottish Power’s acquisition of Yorkshire Energy, this can take several months. This move would lower costs for these suppliers and ultimately for consumers – whose bills are likely to rise as businesses face higher costs.

No proposals have been confirmed yet, but if approved after consultation, the new rules are expected to come into effect from 2022.


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