Over Half of UK Households Emerge from Winter with Energy Account Credit
A new survey conducted for the comparison site Uswitch has revealed that more than half of UK households are concluding the winter season with credit balances in their energy accounts. The findings indicate that energy suppliers are currently holding approximately £3 billion of household funds accumulated through direct debit payments that were not fully utilised during the colder months.
Credit Balances and Supplier Holdings
According to the poll, the average home that is in credit has built up almost £200 with their energy supplier. Overall, the total credit held by suppliers is £179 million higher than the same period last year. Uswitch suggests this increase could be attributed to a milder winter than anticipated and direct debit amounts not adjusting as rapidly as fluctuating energy rates.
Ideally, households should end the winter with little to no credit, having consumed it throughout the colder period. They are expected to rebuild their credit during the spring and summer when energy usage typically decreases. However, the survey shows that 16 million households, representing 57% of the total, have credit with their energy supplier at the end of this winter.
Credit Distribution and Consumer Intentions
The data reveals that 63% of households on fixed energy deals are currently in credit, compared with 56% of those on standard variable tariffs. Notably, one in ten consumers, or 12%, have balances exceeding £300, while 4% are more than £500 in credit.
Regarding future actions, three in ten households with credit, or 31%, intend to request a refund of some or all of their balance. In contrast, 63% plan to leave the money with their supplier in an effort to reduce their monthly payments. The poll indicates that just 7% will ask their supplier to return their full balance, while a quarter, or 24%, will request a partial refund.
Expert Advice and Market Context
Uswitch advises consumers to maintain around two months of average monthly payments as credit in their energy accounts to safeguard against higher costs during the coldest months. The comparison site also urges households without functioning smart meters to regularly submit meter readings to ensure account balances and direct debit levels remain accurate, thereby avoiding overpayments.
This survey comes amid recent changes in the energy market. Household energy prices fell by 7% from April 1, offering a brief respite for consumers. Ofgem's price cap decreased from £1,758 to £1,641, a reduction of £117 or approximately £10 per month for the average dual-fuel household. This represents an 11% year-on-year decline, though bills remain £600 higher than during the winter of 2020 to 2021.
The reduction is smaller than the average £150 cut to bills pledged by the Chancellor in November, when she shifted 75% of the renewables obligation cost from household bills to general taxation and discontinued the energy company obligation scheme. Concerns are mounting about potential bill increases from July due to the Middle East conflict, with latest predictions from Cornwall Insight suggesting an 18% rise, or £288 annually, pushing bills nearly £900 above pre-crisis levels.
Official Commentary
Ben Gallizzi, energy spokesman for Uswitch, commented: "More than half of UK households are coming out of the coldest time of year with credit in their energy accounts. At this time of year, households should generally have used up most of their credit over the colder winter months. However, it is advisable to keep about two months' worth of payments in energy credit to cover higher winter bills ahead. With energy prices predicted to rise in July, households with more than two months of energy credit could consider leaving some of it with their supplier to take some of the sting out of winter bills later this year."
The survey was conducted by Opinium, which polled 2,021 energy bill-payers between March 24 and March 30.
