I’m in credit with my energy supplier — what should I do?

Energy firms held a total £8.1 billion of customers’ money at the beginning of 2023, Ofgem has reported. If you’re in credit with your energy supplier, you might be entitled to a refund. We explain your rights and how to make sure you get any money you are owed back.

Energy suppliers have been raising direct debit payments for millions of households in recent years. This has happened because the cost of electricity and gas has shot up.

But some people, particularly those who have cut down on their energy use, have built up hundreds of pounds of credit on their accounts which they then struggle to get back.

In this article we explain:

• What does “in credit” mean on my energy bill?
• How much credit are energy companies allowed to keep?
• Do energy companies have to refund credits?
• What if my direct debits are too high?

Find out about the cost of living crisis.

What does “in credit” mean on my energy bill?

If you pay for your energy by direct debit then you might end up “in credit” with your supplier. This means that they owe you money. This is because you have used less gas and electricity than you have been charged for. Or because your energy bill hasn’t been calculated yet.

The opposite of being in credit is being “in debit” with your supplier. This means that you have used more energy than you have paid for, so you owe the company money.

Why am I in credit on my energy bill?

Energy providers usually base a customer’s direct debit payments on an estimate of how much energy that household is likely to use over the course of the next year. This way, they hope to ensure the cost of usage is covered. 

The other rationale is that customers’ direct debit payments, which are generally split into fixed monthly sums, will be consistent throughout the year. So even if your actual energy use fluctuates with the seasons, your payments will be predictable. 

So you might end up in credit in the warmer months. You then use it up in the winter when you consume more energy to heat and light up your home.

The theory is that all this will balance out. So you pay more than you need to in one season and this covers what you owe the supplier in another season, or vice-versa.

But it’s not just the summer months when you might be in credit either. Here are some other reasons why this might happen: 

• You use less energy than you’re paying for throughout the year. Perhaps because you have used the gas and electricity less than usual, and this hasn’t been factored into your direct debit payments.
• It might be that your supplier has overestimated your future energy use. If you don’t have a smart meter – where readings of your usage are sent automatically to the energy provider – or it is not receiving regular meter readings then they will estimate how much you have used. This could lead to overly high direct debits and cause you to build up credit on your account.
• You might also end up in credit if your direct debit payments don’t align with when you’re billed. For example, you might have monthly direct debits but your supplier calculates your bills every three months.

It’s normal for people to have a bit of credit or debit on their energy account for some parts of the year. This has been particularly true amid the recent surge in energy prices.

To account for this, suppliers have increased direct debit payments to cover the extra cost.

What’s the problem with having credit on your account?

If you have a small amount of credit sitting in your energy account, that might not be a problem. In fact, it can be a good thing. It can mean money will go towards your energy use during the colder months without you having to pay extra.

The problem for a number of energy customers is that they have ended up with hundreds of pounds in their accounts. And when they ask for this money to be returned, their provider makes it difficult.

Some people have thousands of pounds in credit and have had to jump through hoops to get it back, according to an investigation by our sister website The Times.

Many households have cut down on their energy use to save money. But some complain this hasn’t been reflected in their monthly payments. 

This is particularly problematic now that people are struggling financially during the cost of living crisis.

Critics have accused energy companies of treating customers unfairly by holding onto millions of pounds of customer cash. Even the energy regulator has accused suppliers of using customer balances like an “interest-free company credit card”.

How much credit are energy companies allowed to keep?

As it stands there isn’t a specific limit on how much of your money credit energy companies are allowed to hold onto. But providers must give you a valid reason for keeping your money. 

For example, if you haven’t supplied a recent meter reading or there’s an issue with your smart meter then your supplier might want this information before refunding you. This is so that they can forecast your energy use and work out how refunding your credit balance will affect your direct debits.

Your supplier will also want to make sure that by reimbursing you, heavier energy use at other times of the year won’t leave you severely in debit if your regular payments don’t then cover this usage.

The regulator Ofgem said providers must have “reasonable grounds” not to refund your credit promptly, so make sure they have given you a clear explanation. Try and get this in writing so that you have a record. 

If you don’t think the reasons are fair for holding onto your money, you can make a formal complaint.

If you have complained and your issue still hasn’t been fixed, you can take your case to the Energy Ombudsman.

Do energy companies have to refund credits?

If you have built up credit in your energy account, you can ask your supplier for a refund at any time.

However, many people have found that getting their money back hasn’t been straightforward. Some have said they have been waiting for months and had to chase their supplier repeatedly before finally being reimbursed.

While the energy regulator Ofgem said it expects refunds to be returned “promptly”, there is no time limit within which suppliers have to do this. 

So what should you do if you’ve built up lots of credit on your account and want it back? Here are the steps you can take:

• Ask your supplier for a refund
• If you haven’t heard back within ten working days, chase them up
• Make sure you put it in writing so that you have a record of what was said
• If you still haven’t heard back after another ten working days, make a formal complaint to your supplier
• If you still haven’t been refunded after eight weeks then go to the Energy Ombudsman

Rather than being reimbursed, another option you have is to ask your supplier to change the way your direct debits are spread out. For example, you might want to agree that your supplier presses pause on your direct debit payments until you have used up the credit on your account.

But while there aren’t any time limits for refunds if you’re staying with the same provider, it’s different if you’re moving to a different energy supplier. 

In this case the company you are moving from should:

• Send you a final bill within six weeks of your switch 
• Refund any remaining credit within ten working days of the final bill being issued

What if my direct debits are too high?

If the cost of your energy use is lower than your direct debit payments then you will build up credit.

Some energy customers are finding that despite having huge credit balances, their monthly direct debit payments have gone up. This means that rather than making a dent in the credit balance, they just end up adding to it instead.

If you’re worried that your direct debits are too high, you can challenge this by asking your supplier to reduce the regular payments.

Many companies let you do this online. However, bear in mind that some will only let you cut your direct debits by up to 10% through their websites, meaning you have to call the provider to bring them down by more than that.

Provided your supplier agrees to reduce your regular payments then this should come into effect the following month. If it turns out that you have been charged too much because your bills weren’t accurate, your provider must give you a refund. 

We explain how to work out if your direct debit payments are too high.