Consumer Rights: How to get back the £2bn energy firms owe us

Big Six hoard overpaid monthly direct debit payments ... but there are ways to force a refund

The stakes are rising in the standoff between the energy companies and the Great British Public. Following an uncomfortable session in front of MPs on the Energy and Climate Change Select Committee bosses of the Big Six firms promised to pass savings on to customers if the Government cuts green levies. But they were accused by the boss of a small supplier of charging as much as they thought they could get away with.

While we wait for the MPs to decide whether, and by how much, customers are being ripped off, a report from Which? shows that the Big Six have been hoarding our money to boost their bank balances. Can it be fair that they hang on to £2bn that we've overpaid to them because they set our monthly direct debit payments too high?

I don't know about you but I recall being told by my gas and electricity suppliers that the most cost- effective way to pay was to agree a monthly amount taken out of my account by direct debit. There are usually discounts for this. The idea is that by paying the same amount each month you pay for more than you use over the summer but have the peace of mind of knowing you won't have to find extra in the winter to cover higher bills.

However it seems that collectively we've paid in £2bn more than we needed to and the suppliers have been hanging on to the money.

So do we have a right to a refund? The companies review direct debit accounts - usually once a year but in some cases more often. At a review they will look at whether the payments you've been making are sensible given how much gas or electricity you've used, and adjust monthly payments up or down at that stage. If you are in credit most companies have a figure over which they will give you an automatic refund. Some will refund a portion of the amount you have accumulated and use the rest to reduce your monthly payments. British Gas refunds automatically if a customer has a credit of more than £200 at the time of the annual review of their gas or electricity account. They say very few customers ever get an automatic refund because they check twice a year to make sure direct debits are set at the right level. Scottish Power automatically refunds if you have overpaid by three months' payments and it pays £1 for every £33 by which you are in credit over £100. If you are more than £5 in credit with E.On when it reviews your account you get your money back.

If you have overpaid by less than your supplier's threshold for an automatic refund you can ask for your money back. You'll need to give them an up-to-date meter reading and then they will calculate whether you're due a refund by their own rules. I have had a refund because I've been more than £150 in credit – but I've only received the amount over the £150. But very few of us ask for a refund and companies have different policies on how much they will refund and how much they will hold back to reduce your next year's payments.

Each company's terms and conditions for paying by direct debit are there somewhere in the small print. Several people have told me they've been refused a refund when they've asked but had their direct debits reduced. The Big Six supply about 98 per cent of the UK's energy but there are smaller companies to which you might want to switch in protest.

Energy Minister Greg Barker wants companies to give us our money back or pay interest on it when we are in credit. But if they are forced to give us back that £2bn you can bet that, like the banks, they will look for other ways to get our money to replenish the kitty. Getting our cash back now could cost us in the long run.

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