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17 Mar 2021 | 11:28

UK energy firms 'will have to refund' credit surpluses - Ofgem

(Sharecast News) - UK energy firms could soon be told to hand back £1.4bn of customer credit under new rules proposed by the industry regulator Ofgem. The practice of keeping customers' cash has prompted worries that some suppliers may be the surpluses to fund otherwise unsustainable business practices.

Under the planned rules, energy firms will need to "auto-return" the extra credit to their customers every year on the anniversary of joining the supplier. Ofgem estimates that on average households stand to get £65 back.

"This is an important step in making the retail energy market fairer for consumers at a time when many are facing financial hardship," said Ofgem chief Jonathan Brearley.

Households usually build credit during the summer months when less energy is used.

Ed Dodman, a director at the Energy Ombudsman, said the new rules should help to tackle unrefunded credit balances, which accounted for more than 1,000 complaints to the ombudsman last year.

"We know from looking at complaints that suppliers can sometimes take too long to issue refunds, which can be stressful for consumers," he said.

"Just as people are expected to pay their energy bills on time, we think it's fair to expect energy suppliers to do the same with refunds."
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