'I'll make the Big Six refund millions of YOUR cash... or face fines,' says minister as energy companies are summoned to Downing Street over direct debit payments.
Ministers have reacted to growing public outrage over inflation-busting charges by telling the power giants to stop stockpiling more than £2 billion from households.
The companies will be told that if they don’t return the money – or pay back the estimated £36 million a year that the cash pile earns in interest – they will face fines. Energy Minister Greg Barker said consumers would be ‘outraged’ that companies such as British Gas and EDF boost their revenues by holding on to customers’ cash. Greg Barker said: ‘Customers will rightly feel outraged that they signed up to direct debit payments for cheap tariffs but instead find their cash stockpiled.
‘We need to stamp this out now and energy firms must come clean on how much cash they are sitting on. If we find serious abuse, rest assured we will come down on them like a ton of bricks.’
He is expected to point to smaller energy firms – such as Ovo Energy, which offers an annual rate of up to three per cent on credits – and tell the ‘big-six’ companies that they should do likewise.
The companies will also be asked to sign up to a code of practice, which will impose strict conditions on the use of customers’ surplus cash.
A senior Whitehall source said: ‘We are becoming increasingly concerned about the problem. If the energy companies are unable to resolve the issue, the regulator, Ofgem, will be asked to investigate and potentially impose fines.’
The average annual dual energy bill is now nearly £1,500 – with figures from Ofgem showing that, since 2001, gas bills have risen by 137 per cent and electricity by 66 per cent.
Ofgem has confirmed that millions of customers who switched to a direct debit payment system to secure a cheaper tariff have been overcharged. And the consumer group Which? says the energy giants enjoy a £1.2 billion ‘surplus’ each year from customers who are in credit – which they are then free to invest for an annual return of up to three per cent.