My energy credit - What happens to money that can't be refunded?

Residential Customers on credit meters.

Why some credit balances can’t be refunded?

When customers switch supplier or move house we send them a final bill to let them know how much energy they’ve used up to their final meter readings and what they need to do.  Usually customers need to pay for the energy they’ve used and then, when they’ve paid us, we close their account.  Sometimes we owe them money which we refund and then close their account.

We normally get the final meter reading from the customer’s new supplier.  This means we can refund over 99% of final bill credits each year from customers that change supplier.  The difference relates to customers who don’t give us their name.

Sometimes when a customer moves house we don’t get a meter reading from either the old or new occupant.  A customer may not give us a forwarding address or, particularly in short term lets, their name.  A customer may forget to cancel their standing order so a credit may need refunding after the account is closed.  We refund around 82% of final bill credits each year from house moves.

We’re doing more to return credits to customers

  • Over the last year we have sought to put right past cases where we should have done more to give money back to customers, refunding over £8M in December 2013.
  • We’re looking to do more to trace customers who leave without giving us their name, without it leading to higher costs for all customers.
  • We’re joining an industry wide PR campaign to encourage customers who may be in credit to contact us.
  • We’re looking to use estimated readings as a basis for refunds for customers that leave us as well as those that join us.  Most of the £3M unreturned from house moves each year is from estimated final bills.

Principles of Good Practice

We, together with other larger suppliers, have agreed 10 Principles of Good Practice for treatment of these amounts, which we call “Final Credits”.  

How do we use money which cannot be returned?

In 2010 we took the last step in closing the accounts from our purchase in 2002 of TXU from its administrators.  We posted £16m to our profit and loss account, of which an estimated £10m was from un-refunded credit balances.  In June 2013 we took £25M to our profit and loss account from other outstanding credit balances.  Doing this was part of our normal operation as a business since, although we have worked hard to return credits, some cannot be returned and it helps us reduce costs.  However, customers’ and former customers’ funds always remain available to them to reclaim, should they apply to us.

  • In addition: Specifically, in 2013, recognising the amount we refer to above helped give us confidence to be the last major supplier to increase prices.  In fact we delayed our price increase into January 2014, saving customers £15m a month.
  • In other areas we do more as an energy supplier than we are legally required to do. 
  • we have installed over 340,000 smart meters (cost £50m), a significant step towards helping customers reduce their energy usage and improving customer service, including ending estimated bills, which are a major cause of unreturned credits.  

In future we will be publishing how we intend to use un-returned credits and how much they are.  We will also be setting up a Trust Fund for customers in hardship with the un-refunded credit balances in future.

Residential Customers using prepayment meters.

Current prepayment meter technology is limited and we can only fully close an account on the day a customer moves house or changes their supplier if our customer clears their meter.  Commonly, when a customer leaves us they will use any credit on the meter before starting to pay the new supplier.  This shows as a credit on the final bill from the old supplier (and a debit for the new supplier).  The situation is similar if a customer moves home, although here any credit on the meter will be left for the new occupant.  If a customer has put money on the meter and asks us for a refund we will do this, although the credit would still be available for the new tenant. 

However, where prepayment customers don’t follow the required process we, the suppliers, have to balance the debit or credit.  With this in mind we take prepayment meter final credits to our profit and loss account as a means of off-setting these debts.

Business Customers

The information we need to refund a credit to a business customer is similar to those for residential customers and we will apply the residential Principles of Good Practice to microbusiness accounts. 

We will publish how we will use unreturned credits and how much they are.  For larger customers, over half of unreturned credits are due to accounting practice, where a customer has a credit on one account and a debit on another.

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