Energy Direct Debits 'Interest-Free Loans', Says Which?

New research from Which? Money reveals that energy suppliers are effectively using their customers' money as 'interest-free loans', by taking unnecessarily high direct debit payments each month.

Four in five people surveyed by the consumer group said that they pay their energy bills by monthly direct debit. A quarter of those in credit were owed more than £100 and 8% more than £200. This was particularly surprising as the research was carried out in winter - when energy use is typically higher. Which? Money says these customers are losing out on interest they could earn on the money they have overpaid.

Direct debits being set too high was the most common complaint with energy providers in the latest Which? survey about customer satisfaction. The survey found that energy suppliers are one of the lowest performing of all industries when it comes to customer satisfaction, and customers are getting increasingly less satisfied.

Npower was Which? members' least favourite energy provider, with a satisfaction score of only 30%. Utility Warehouse achieved the highest customer satisfaction score of 83%.

Martyn Hocking, Editor of Which? Money, said: "It seems incredible that energy companies can take hundreds of pounds more than they need to from their customers, and profit from the interest that this money will earn at our expense. While a small amount of credit built up over the summer months can be used up during the winter, it's difficult to see how a £200 credit will be used up - particularly as the customer makes the same payment each month.

"Our customer satisfaction report makes for disappointing reading. As the recession bites, we are all looking for better service at reasonable prices, and energy suppliers need to take note. People who aren't happy with their supplier should switch - they could make big savings."

People are advised to regularly check their meter readings and the direct debit amount, and to contact their supplier if what they are paying does not accurately represent their usage.

(CD/JM)