Energy suppliers face three-week deadline in review over direct debit rip-off hikes

4 May 2022, 01:07

Energy providers face a three-week deadline.
Energy providers face a three-week deadline. Picture: Alamy

By Emma Soteriou

Energy suppliers face a three-week deadline to explain "completely unacceptable behaviour" over direct debit hikes or face "substantial fines", Business Secretary Kwasi Kwarteng has warned.

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Energy companies must inform customers if they are increasing the amount taken each month by direct debit, giving them the opportunity to challenge rises based on meter readings.

However, following the energy price cap rise, it has been reported that some companies increased direct debits without justification and ignoring or rejecting appeals for a review.

Mr Kwarteng said: "Some suppliers have been increasing direct debits beyond what is required.

"The regulator will not hesitate to swiftly enforce compliance, including issuing substantial fines."

Energy regulator Ofgem said customer credits could not be used to "prop up [companies'] finances".

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It comes as Boris Johnson is under increased pressure to introduce a windfall tax after BP revealed its profits for the first quarter of the year had more than doubled amid the cost of living crisis.

However, Mr Johnson said on Tuesday that a windfall tax would hamper investment and keep oil prices higher over the long term.

He told ITV: "If you put a windfall tax on the energy companies, what that means is that you discourage them from making the investments that we want to see that will, in the end, keep energy prices lower for everybody."

BP said the increase was due in part to "exceptional oil and gas trading", despite the steep rise in oil and gas prices.

It unveiled plans to invest up to £18 billion into the UK energy system by 2030.