Energy market secrets: faulty smart meters, inaccurate bills, Direct Debit overpayments, and more

These six facts can help prevent you from getting ripped off by your energy supplier.

It’s no secret that the energy industry doesn’t have the best reputation for customer satisfaction.

And while sky-high bills are a common cause for complaint, they are far from the only problem…

For many of us, the industry is simply too confusing as we struggle to understand our rights surrounding complicated bills and dodgy smart meters.

Luckily, knowledge is power.

In this article, we share six facts that some energy companies might prefer we didn't know.

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1. You don’t have to have a smart meter

It’s pretty obvious that the energy industry bosses would like us all to have smart meters installed in our homes.

Centrica CEO Chris O’Shea made this clear in May when he told a committee of MPs that compulsory installation should take place on a street-by-street basis across the UK.

Fortunately, however, the decision over whether you have a smart meter in your home is entirely yours.

If your energy company sends you a message inviting you to have a smart meter, you are under no legal obligation to accept.

The only case in which a company can insist you have a smart meter is if your traditional meter is no longer working or has reached the end of its natural lifespan.

Frustratingly, most companies no longer produce traditional maters so you may have little option in this case.

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2. Millions of smart meters are faulty

Following on from the point above, most energy companies are unlikely to shout about the fact that almost a third of household smart meters are not working properly.

As part of a recent investigation, Citizens Advice polled 4,000 households about their smart meter usage, with 31% claiming they had encountered an issue with their in-home display – the screen that shows energy usage and costs.

Some 20% of respondents with a smart meter also said they needed to submit manual readings because their devices had stopped sending automatic readings.

3. Meters have a ‘permitted’ margin of error

As we reported earlier this year, inaccurate meter readings could add as much as £50 to your energy bill every year.

Under legislation set out by the now obsolete National Measurement & Regulation Office, these devices can have a permitted level of error and still be considered ‘accurate’.

With electricity meters, this margin is between 2.5% for overpayments and 3.5% on underpayments.

In the case of gas meters, these figures are 3% for both under and overpayments.

Although these ‘tolerances’ may seem negligible, Money Mail crunched the numbers and worked out that they could, in fact, add up to £2,750 to your bills over a lifetime of payments.

4. Companies need to justify your Direct Debit amount

If you’re not happy with the amount of your Direct Debit, you are perfectly entitled to challenge this with your energy company.

As part of its licensing agreement, your energy company needs to provide you with a clear explanation of how your bill has been calculated (if requested).

Furthermore, companies need to back this up with evidence, such as any meter readings they used.

This requirement can come in particularly handy if your energy company is refusing to lower your Direct Debit, despite clear evidence that you are overpaying for your usage.

And, of course, you can make a complaint to the Ombudsman if you’re not satisfied with your provider’s justification of your Direct Debit amount.

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5. You can only pay for what you use

If you pay your bill by Direct Debit, chances are you pay a fixed amount every month.

Under this model, your provider will estimate your annual bill based on your previous usage and split this amount into 12 equal payments.

However, most suppliers also allow you to set up a ‘variable’ Direct Debit in which you only pay for the energy you use.

Similarly, you can also opt to pay your bill on arrival (normally at the Post Office or via a card payment).

Be aware, you’ll likely face significantly higher bills over winter if you pay this way.

6. Switching is making a comeback

As the war between Russia and Ukraine sent wholesale energy prices soaring, worthwhile competitive deals essentially disappeared from the market.

In other words, most of us had little choice but to remain on the Price Cap at the height of the cost-of-living crisis.

Thankfully, however, it seems as though change is on the horizon.

Although there are no guarantees when it comes to energy prices, there are now a number of deals on the market that could be worth considering.

In fact, uSwitch estimates that you could save up to £90 a year by switching suppliers today.

This increase in switching may also gain momentum if Ofgem’s proposal to end the ban on ‘acquisition tariffs’ comes into effect.

As the name suggests, these deals allow energy companies to reserve their cheapest offers for new customers.

Although the regulator had banned this practice in 2022, it recently launched a consultation into reversing this ban in order to increase competition in markets.

With the consultation having now closed, Ofgem has said it will announce its findings in due course.

Beat the recent energy price rises by locking into a cheaper deal now. Save up to £90 a year. Compare tariffs now with uSwitch.