Ofgem seeks change to gas and electricity Direct Debits

Ofgem, the energy industry regulator, has told gas and electricity companies that they must calculate Direct Debit payments more accurately.

The regulator claimed that many bills paid in this way are set too high. Although surpluses built up through overcharging are eventually used to offset future bills, some consumers have complained that gas and electricity bills are often set too high.

This may be because many energy bills are based on estimates, rather than completely accurate readings of the meter.

Also, a survey of consumers found that around 70 per cent of them do not understand their bills. In response to this, Ofgem has said that suppliers should do more to explain billing calculations to their customers.

Despite the report from Ofgem, Direct Debit is still one of the most convenient ways to pay your energy bills, and can result in consumers receiving discounts from suppliers.

Other types of billing

There are many different ways you can pay your gas and electricity bills, depending on what is easier for you.

Gas cost of usage

You can choose from a variety of payment options, including both fixed and variable Direct Debits, standing orders and prepayment meters. Alternatively you can select to pay when you receive your bill.

These all have different advantages and disadvantages. For example, prepayment meters make it easy to keep track of how much energy you use.

This also means you will never be faced with unexpectedly large bills. On the other hand, average prices are higher and you could have gas or electricity switched off if you do not top up the meter in time.

A fixed Direct Debit means you always know how much you will pay each month, although it could also mean that charges will build up if you regularly pay for less energy than you use.

If you pay when you receive your gas and electricity bills, you will be sure you are always paying the correct amount - provided it is based on accurate readings. It also gives you control over how much and when you pay.

Choosing payment method

You can choose the method you use to pay your energy bills quickly and easily when you decide your gas or electricity supplier.

And if you decide to switch supplier, this is also a fast and straightforward process.

Rather than contacting all the various energy providers that operate in your area to find out about their prices and payment methods, you may choose to use a price comparison site.

All you will have to do is answer a few simple questions about your location, current payment method and average monthly bills. You will then be asked to choose how you would prefer to pay your bills in the future.

Compare daily elctricity usage

This information will then be used to find the suppliers that operate in your area who may be able to offer you better value gas and electricity.

Pricing structures

When you choose an energy supplier, you will have the option of various pricing structures. This could have an effect on how much you pay, so each should be looked at carefully.

For example, online plans allow you to manage your account details over the Internet, and often result in lower administration fees for your supplier. This, in turn, could result in a discount for you.

Social plans help the must vulnerable members of society pay their gas and electricity bills, while green plans help combat climate change.

If you choose an Economy 7 plan, electricity used at night will cost less. A fixed plan offers simplicity, as the price of each unit will be set for a certain period of time.

Alternatively, a capped plan means that gas and electricity prices will not rise above a certain level, although they can go down.

The range of plans available from energy companies is designed to suit all