Energy giants to refund £2bn to consumers

Updated: 
Energy companies will tell you it's a good idea to build up credit for higher winter bills. But the cash stockpile the Big Six - British Gas, npower, Scottish Power, E.ON, SSE and EDF - are hoarding is now in the £2bn region.

Enough to pay them more than £30m extra in interest a year. Now they've been ordered to repay you, with interest.

Hoarding your money

Quoted in the Mail, a Government source says the Big Six will be ordered to pay interest to those with a credit surplus. If they don't, then they could be fined. As energy bills and monthly direct debits have grown - the average duel fuel bill now tips £1,500 - so have energy industry cashpiles.

"The minister will urge energy companies to agree to new industry wide best practice for this winter and will push them to pay interest to customers who are in surplus," a Government source told the paper.

A meeting between energy minister Greg Barker and energy companies is thought to happen soon. The Government remains under pressure to show it is sensitive to consumer worry about the rising cost of energy, as well as responding to Labour's promise to freeze energy prices.

Not all the energy players hang onto customer cash without paying interest. Ovo Energy's refund policy pays 3% on credit balances currently, for example, but Ovo is in the minority. Bear in mind this 3% interest rate is better than many bank account interest rates - and it's also tax-free.

20m cash injections

Npower told AOL Money it automatically refunds customers who have built a credit of more than £60 - though this is only done once a year, on the anniversary of when each account was opened - while the threshold is £100 for SSE.

20m UK consumers pay their energy bills via direct debit, with an average credit of around £100 on each account, it's estimated. Very few consumers request a cash rebate once credit is built up.

On the other hand, there's something to be said to building up a credit, especially after the hard winter of 2012/13 - as long as interest is paid. What would you prefer? Some cash saved up in advance - or in your pocket?

Meanwhile prices continue to climb. Scottish Power joined other energy suppliers recently by announcing an 8.6% hike in prices. From 6 December, 2.2 million customers will see a £118 hike in their bills, a total rise of £137 over the last year alone, according to Moneysupermarket.com.

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