Struggling families have been warned not to heed advice given on social media if they can't afford to pay their energy bills. Experts are cautioning the well-meaning tips on Facebook and Twitter discussion pages devoted to budgeting could plunge people into a winter of misery.
Charities are advising people instead to challenge their energy companies if they think the amount they have been asked to pay is too high or if they find they can't afford to pay the bills.
The suggestions started to gain traction largely due to pressure group Don’t Pay UK 's campaign, when supporters were encouraged to cancel their energy direct debit on October 1 to protest high charges that kicked in on that day due to the increase in the energy price cap. The group did not reach the required volume of supporters in time, but have pledged to restart their 'bills strike' when their supporters reach one million people.
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A lot of charities and money experts warned people about how damaging the Don’t Pay UK campaign could be for some people, and an alterative strategies on social media suggested other ways to cope with high bills
You can challenge the increased direct debit payment amount with your supplier if you disagree with it. Ask your supplier to justify how they calculated the new amount and they must explain clearly how they reached the figure they want to charge, and give you the meter readings they used. If you’re still not happy with your supplier’s calculation, ask your supplier to lower your monthly payments to more accurately reflect your energy use. If they won't lower your payments to reflect your usage, you should make a formal complaint to your supplier, using the information here.
Here we look at some of the other pieces of ill-founded 'advice' currently floating around the internet and explain how direct debits actually work.
1. Cancel your direct debit and just pay what you owe
There is a logic to only paying for the energy you actually use rather than the energy you might use, but paying by direct debit is the cheapest and most affordable thing to do in the long term. Money Saving Expert Martin Lewis has warned people against looking at a short-term cash flow gain against the longer-term cost increases of paying your bills as they come in.
Direct debits work by smoothing out the variations in your bills over the whole year. Your energy supplier will look at the amount of energy you are likely yo use over the whole year and estimate the cost based on the current tariff and any increases expected. This amount will be divided by 12 and you will pay the same amount every month.
Your energy bill can vary a lot between summer usage, when you are unlikely to have the heating on and won't use as many lights, and winter usage. Paying by direct debit means you pay the same amount every month, regardless of the amount used, as long as your total usage stays within the original estimate prepared by your energy company.
The plan is you pay more during the warmer months to build up credit for your heavier use in the winter months. If your estimate has been correct, families paying by direct debit should have built up a credit now ready for winter. Remember, a lot of the 'advice' came during the summer months when you would gain by just paying for what you use. In the winter, doing this will put a lot more strain on your family budget and you could find the winter bills a real challenge unless you budget for them yourself.
It’s a common myth that energy companies guess how much you’ll use, but they only estimate if they haven’t received a meter reading from you so it's critical to send up-to-date meter reading regularly to make sure your estimate is on track. If you have smart meter, readings should be sent automatically.
2. Cancel your direct debit and then make a complaint about the size of your bill to your Energy Ombudsman
The logic behind this is that your energy company can’t force you to pay while the complaint is in progress and advocates of this scheme claim it won't hurt your credit rating. If you have a valid complaint – you should complain. However, your bill simply being too high is unlikely to be upheld by the Energy Ombudsman and you’ll still have to pay what you owe for the energy you've used.
3. Just pay what you can - there's nothing your energy company can do
When you build up arrears to your energy supplier they can take action like moving you onto a prepayment meter or, in rare cases, they could disconnect you. There are clear rules around this, such as your supplier can’t make you move to prepayment if it wouldn’t be safe or practical; for instance if an illness or disability means you’d be at risk if your gas or electricity was cut off.
Your supplier also needs to follow clear guidance and make sure they’ve given you notice, given you time to pay any debts and offered you alternatives to being moved onto a prepayment meter. There is further information about this on the Citizens Advice website.
It’s also worth bearing in mind that energy debts could affect your credit rating which may impact your ability to access lending in the future. Paying via prepayment meter is also likely to mean you pay more for your energy.
What can I do if I can't pay?
It’s absolutely vital that you contact your energy supplier the second you start to struggle and negotiate a payment plan to make things easier. Energy companies also offer a range of grants to help people pay off their debts. A spokesman for Newcastle Citizens Advice says: "We’d always encourage people as a first port of call to contact their energy supplier because they have to help you come to a solution. Try to negotiate a deal that works for both of you, whether that’s reducing your payments in line with what you can afford or finding a way to pay off any debts you’ve built up. If people are worried about having this conversation then Citizens Advice can help.
Are there any other advantages to paying by direct debit?
Direct debits make your bill around 6% cheaper, according to Money Saving Expert. Many energy providers offer small discounts if you pay by direct debit which you could lose if you cancel and pay by credit or debit card when your bill comes in. Having a direct debit also makes it easier for energy firms to refund any overpayments made – as they’ll have your bank account details on their systems.
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