It was recently revealed that British Gas had profited from overpayments generated by estimations and direct payments by depositing the funds in its company accounts.
It is believed that the amount of money held by energy firms through these tactics is a collective £2 billion, netting them £36 million per year in interest.
Energy minister Greg Barker wants companies to pay this money back to those who have lost out, with consumer groups saying that getting them to do so has been notoriously difficult in the past.
‘Come clean’, firms told
Barker is set to come down hard on firms that are holding overpayments, telling them at a meeting at Whitehall that it is time to come clean, and urging them to reveal how much they have benefited from overpayments.
Providers will also be asked to give details on how much customers are in credit to show them what they are due back.
“With more hardworking people switching to direct debit to get the best deal on their energy bills, it is vital that they aren’t being unknowingly ripped off,” Barker said, adding that many firms are deliberately sitting on cash as a way to make money.
“The better energy companies will now automatically refund your cash if you build up more money than required to meet your normal bill or will pay you interest if you are in surplus,” he continued.
“However, it looks like some companies aren’t doing that and I am determined to get consumers a better deal.”
Cost of living attacked by Labour
The over-charging scandal will also be used by Labour as a way to gain more leverage in its crusade against prices.
Last month, leader Ed Miliband said he would freeze prices for 20 months if he should manage to gain power in 2015.
He has now moved to criticise energy firms for the way they increase prices far above the average rate of inflation and wholesale costs.
In a speech at Battersea Power Station, he said the wholesale cost of energy has risen by 1.6% since 2011, while bills have risen by 10.4%.
Miliband has blamed the prime minister for forming an alliance with the big six, which has seen the cost of energy rise and people’s budgets stretched to breaking point.