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Energy firm will pay 'interest'
Energy firms have been under pressure over direct debit bills
Scottish Power will pay "interest" to any customers whose direct debits put them more than £100 in credit.
The payments, of £1 for every £33 someone is in credit, could benefit the firms's 3.2 million customers who pay by direct debit from June this year.
Energy firms have been accused of setting monthly direct debits too high.
However, the energy regulator Ofgem has cleared them of doing this deliberately, but told them to explain their billing more clearly.
"Scottish Power make every effort to ensure that our customers direct debit instalments are calculated accurately at the start of each payment year, so ensuring they only pay for the energy they use," said Willie MacDiarmid, of Scottish Power.
Recalculate
The scheme will work by crediting customers with £1 for every full £33 they are in credit on the annual date on which their direct debit is recalculated.
To qualify, the surplus must be more than £100 and below £500.
The move by Scottish Power was welcomed by the consumers' organisation Which?, which had accused energy firms of deliberately charging too much to rack up large interest-free loans from their customers.
"It seems incredible that energy suppliers can effectively use their customers' money as 'interest-free loans', by setting direct debit payments too high and allowing balances of hundreds of pounds to build up," said Martyn Hocking, editor of Which? magazine.
"We hope to see the rest of the 'big six' play fair with customers and follow their lead," he added.
Overcharging?
Which? said last week that its research had found that 13% of energy customers were £100 or more in credit on gas or electricity bills.
It calculates that Scottish Power's plan amounted to offering annual interest payments of 3% on the surplus funds.
But the accusation by Which? against the wider industry, of deliberate overcharging, has been rejected by Ofgem.
After investigating some complaints which were first made to it last year, the regulator concluded last week that energy companies were simply "failing to make clear" how they calculated their bills.
"Our investigation found no evidence that suppliers are recovering more money from direct debit customers than they are due," said Ofgem's chief executive Alistair Buchanan last week.
Energy firm will pay 'interest'
Energy firms have been under pressure over direct debit billsScottish Power will pay "interest" to any customers whose direct debits put them more than £100 in credit.
The payments, of £1 for every £33 someone is in credit, could benefit the firms's 3.2 million customers who pay by direct debit from June this year.
Energy firms have been accused of setting monthly direct debits too high.
However, the energy regulator Ofgem has cleared them of doing this deliberately, but told them to explain their billing more clearly.
"Scottish Power make every effort to ensure that our customers direct debit instalments are calculated accurately at the start of each payment year, so ensuring they only pay for the energy they use," said Willie MacDiarmid, of Scottish Power.
Recalculate
The scheme will work by crediting customers with £1 for every full £33 they are in credit on the annual date on which their direct debit is recalculated.
To qualify, the surplus must be more than £100 and below £500.
The move by Scottish Power was welcomed by the consumers' organisation Which?, which had accused energy firms of deliberately charging too much to rack up large interest-free loans from their customers.
"It seems incredible that energy suppliers can effectively use their customers' money as 'interest-free loans', by setting direct debit payments too high and allowing balances of hundreds of pounds to build up," said Martyn Hocking, editor of Which? magazine.
"We hope to see the rest of the 'big six' play fair with customers and follow their lead," he added.
Overcharging?
Which? said last week that its research had found that 13% of energy customers were £100 or more in credit on gas or electricity bills.
It calculates that Scottish Power's plan amounted to offering annual interest payments of 3% on the surplus funds.
But the accusation by Which? against the wider industry, of deliberate overcharging, has been rejected by Ofgem.
After investigating some complaints which were first made to it last year, the regulator concluded last week that energy companies were simply "failing to make clear" how they calculated their bills.
"Our investigation found no evidence that suppliers are recovering more money from direct debit customers than they are due," said Ofgem's chief executive Alistair Buchanan last week.