Suppliers held billions of pounds in customer credit balances last year

Customer credit balances held by energy suppliers rose to as much as £5 billion during 2023.

Figures revealed by Ofgem show that during last summer suppliers held £5 billion in credit balances. That figure fell to £4.1 billion by the end of the year and averages out at £3.7 billion across the whole of 2023.

For comparison, this £3.7 billion average figure is some 20% higher than the £3.1 billion worth of debt Ofgem confirmed was owed to retailers at the last price cap update.

July to September had the highest amount of credit in customer accounts at £5 billion, although consumers generally build up credit during the warmer months ahead of winter.

Meanwhile, the average amount held by consumers was £252, while at the end of winter 2023, the average household energy account was in credit by £178, approximately one month’s bill.

Commenting on the figures Energy UK deputy director Daniel Portis said: “While the figures show that many customers have healthy credit balances, it doesn’t alter the fact that record and growing customer debt remains a huge concern for the industry.

“It’s also important to realise that the credit and debt figures are not comparable here and so do not cancel each other or anything similar. The debt figures do not include all money owed to suppliers but are a leading indicator of bad debt, which is money that is never repaid.

“Conversely, the use of credit balances is closely regulated, with Ofgem having the power to require these to be ringfenced, as ultimately this is money that must be returnable to customers.”

Ofgem said: “We will continue to publish this data quarterly as we have a duty to transparency in the market, and the supplier level breakdowns will be used in our ongoing supervisory activities.

“We expect suppliers to ensure direct debits are based on accurate and up to date information to ensure that credit balances are not excessive and to help customers efficiently manage their bills.

“Customers can ask their suppliers for a refund of their net balance at any time. We will continue to closely monitor credit balances and complaint levels over the winter period to identify and respond to risks of consumer harm.

“Ofgem will be engaging with some suppliers on CCBs. Ofgem has the power in certain circumstances to direct suppliers to ring fence CCBs when in the consumer’s interest.”