Gas burner

In other words, your energy supplier owes you money. With a monthly direct debit you pay a fixed amount each month. So you build up a surplus in the summer when your bills are smaller and run up a debt in the winter.

But the summer surplus may well be more than you need to pay for next winter’s heating. You can see if you are paying too much by looking at your last four quarterly bills. Over the whole year you should have paid roughly the same as the cost of the energy you used. If you have paid much more then consider asking for surplus back.

Under rules laid down by the energy regulator Ofgem in January 2010 you can ask for the surplus back at any time. If you do then the supplier has to repay you unless there is a good reason – for example if you have had problems paying in past winters. In that case the supplier can hang on to the surplus to make sure you can pay the coming winter’s bills.

Some suppliers will automatically refund any significant excess at the end of your annual review period – usually the anniversary of when you opened your account. But others will wait for you to ask.

Ofgem also now makes suppliers adjust the monthly payments so they are as close as possible to the actual amount needed. In the past suppliers have overcharged customers to generate a surplus on which they pay no interest. That should not happen any more – but of course the temptation is there and with prices heading up again it is easy to justify charging you more. The supplier also has to tell you “in clear plain and intelligible language” the details of how the amount of your monthly payment has been calculated. If you still don’t understand how it has been work out, then ask for a clearer explanation.

If you do not pay by monthly direct debit then you will not have these problems. Your quarterly bill will be for the amount of gas and electricity you have used. But remember that if you have not had a meter reading or sent one through yourself then the bill will be based on an estimate and may be wrong. If someone calls to read your meter keep the door on a chain until you have seen their ID and are happy about who they are.

Written by Paul Lewis, this article was first published on September 1, 2010. Paul's opinions are his own and for general information only. Always seek independent, professional, financial advice.