You currently pay £140 a month for energy.

You compare tariffs and a supplier shows you an estimated payment of £125 a month.

Does that mean switching will save you:

£15 × 12 = £180 a year?

Not necessarily.

Your existing Direct Debit and a new energy quote can be different for several reasons — and the difference between the two monthly figures isn't automatically your saving.

To understand why, it helps to separate three things:

the cost of the energy tariff

your monthly payment

and

the balance on your energy account.

They are related.

But they aren't the same thing.

Your Direct Debit is a payment towards your energy account

A fixed monthly Direct Debit is designed to spread energy payments across the year.

That's useful because most households don't consume exactly the same amount of energy every month.

A gas-heated home might use relatively little gas during summer but substantially more during winter.

Instead of paying a very small amount one month and a very large amount another, a supplier can estimate the annual cost and spread payments across the year.

Citizens Advice explains that Direct Debit payments are usually based on an estimate of how much energy you'll use over a year.

So:

£140 per month

doesn't necessarily mean:

£140 of energy was consumed that month.

It tells you how much your supplier is currently collecting.

A new quote may be estimating something different

Now imagine another supplier quotes:

£125 per month

That number may be based on an estimate of what your future consumption would cost on its tariff.

Your existing £140 Direct Debit, however, may have been calculated using:

• a different consumption estimate

• different tariff rates

• an earlier meter reading

• your current credit or debit balance

• an adjustment made during a previous account review

So simply comparing:

£140 versus £125

doesn't necessarily compare the two tariffs fairly.

As we explained in Should you compare energy tariffs using your Direct Debit or your actual kWh usage?, the better starting point is generally to compare tariffs using the same reasonable estimate of your energy consumption.

Your account balance can affect your Direct Debit

Suppose your actual energy consumption is expected to cost:

£1,440 over the next 12 months

That works out at:

£1,440 ÷ 12 = £120 per month

But imagine you also owe your current supplier:

£240

If the supplier intends to recover that balance evenly over the next 12 months, that adds:

£240 ÷ 12 = £20 per month

Your Direct Debit could therefore become:

£120 + £20 = £140 per month

Now another supplier quotes you:

£120 per month

At first glance:

£140 − £120 = £20

and:

£20 × 12 = £240

It might look as though the new tariff saves £240 a year.

But in this simplified example, the £20 difference isn't a tariff saving at all.

It's repayment of the £240 already owed to your existing supplier.

Citizens Advice gives the same underlying warning: Direct Debits can be increased to cover both expected current energy use and arrears from previous consumption.

Credit can work in the opposite direction

Now consider the reverse situation.

Your expected future energy cost is again:

£1,440 a year

or:

£120 per month

But suppose you've built up credit with your supplier.

Depending on how the supplier deals with that balance, your monthly payment may be reduced.

That could make your existing Direct Debit look unusually low compared with a new quote even though your current tariff isn't necessarily cheaper.

Ofgem has previously explained that suppliers should take account balances into consideration when setting Direct Debits: debit balances can increase payments while credit positions can lead to reductions intended to bring the account closer to balance.

This is why account balance and tariff price need to be separated.

Why do energy accounts build up credit?

Seasonality is one important reason.

Suppose you pay:

£130 every month

during the summer.

Your actual energy consumption during those months might cost considerably less than £130.

The unused money remains on your energy account as credit.

During winter, your actual consumption might cost considerably more than £130 per month.

The accumulated credit can then help cover the difference.

Ofgem's latest credit-balance data confirms this seasonal pattern: credit typically builds when energy use is lower and is then used during colder periods.

That's one reason looking at a single month's payment can tell you surprisingly little about the energy consumed that month.

Meter readings can change the picture

Suppose your supplier has been estimating your consumption.

It believes you use:

8,000 kWh of gas a year

Then you submit an actual meter reading and the supplier discovers your consumption has been higher than estimated.

Your account may now be in debit.

The supplier could respond by increasing your Direct Debit.

That doesn't necessarily mean your tariff suddenly became more expensive.

The supplier has obtained better information about how much energy you've actually been using.

Ofgem says that where accounts have been billed using estimates, an actual meter reading can reveal higher-than-estimated usage and a resulting debit balance, which can then affect the Direct Debit.

This is another reason the monthly payment shouldn't be treated as though it were the tariff itself.

Price changes can also change your payment

Your Direct Debit isn't necessarily fixed forever.

Suppliers periodically review whether the amount being collected is likely to cover expected costs.

If tariff rates change, the payment required to cover future consumption may change too.

This is particularly relevant to customers on standard variable tariffs because the Ofgem price cap is reviewed every three months.

For 1 October to 31 December 2026, for example, Ofgem's headline annualised figure for a typical dual-fuel Direct Debit household is £1,723, up 4% from £1,663. The cap actually limits unit rates and standing charges rather than imposing a maximum household bill.

So a change in your Direct Debit can reflect a change in expected future rates without necessarily matching the headline percentage change in the price cap.

Why a £15 lower monthly quote isn't automatically a £180 saving

Let's return to our original example:

Current Direct Debit:

£140/month

New quote:

£125/month

Difference:

£15/month

Multiplying by 12 gives:

£180

But before calling that a £180 saving, we'd want to know:

Are both figures based on the same annual consumption?

Does the existing Direct Debit contain debt repayment?

Does the existing account have credit?

Are both using current tariff rates?

Are both covering the same fuels?

Are standing charges included?

Are there relevant exit fees?

Only then can we start deciding whether the apparent difference represents a genuine tariff saving.

Compare the tariffs on the same basis

Suppose your annual consumption is:

Electricity: 2,500 kWh

Gas: 9,000 kWh

Instead of comparing:

£140 Direct Debit

with:

£125 quoted payment

we can apply those same consumption figures to both sets of tariff rates.

Current tariff

Estimated annual cost using the same consumption:

£1,500

Alternative tariff

Estimated annual cost using the same consumption:

£1,380

Difference:

£1,500 − £1,380 = £120

Now we have a much more meaningful estimated tariff difference:

£120 a year

—not the £180 suggested by comparing the two monthly payment figures.

There may still be other factors to consider, including an exit fee, but at least we're comparing the tariffs using the same household consumption.

Where do you find the consumption figures?

This is why your annual kWh figures are so useful.

As we explained in Where to find your annual energy usage on your electricity and gas bill, look for figures such as:

Electricity annual usage: 2,500 kWh

Gas annual usage: 9,000 kWh

rather than simply:

Monthly Direct Debit: £140

Those consumption figures allow the same household to be tested against different tariffs.

What if the new supplier quotes a monthly Direct Debit?

There's nothing inherently wrong with a supplier showing you a monthly payment estimate.

For budgeting, it can be extremely useful.

The problem arises when the monthly payment itself is treated as proof that one tariff is cheaper.

A quote of:

£125/month

may be perfectly reasonable.

But we'd still want to understand the assumptions behind it.

If another tariff is quoted at:

£135/month

using a different consumption assumption, comparing £125 with £135 may tell us very little.

The fairest comparison uses consistent consumption assumptions.

What happens to your credit if you switch?

Credit on your old account doesn't normally become a discount on the new tariff.

When an account is closed after switching, the previous supplier should issue a final bill and refund remaining credit.

Ofgem says suppliers have six weeks from a switch to send a final bill and then 10 working days from that final bill to refund a credit balance.

So if your old account contains £200 credit, don't simply subtract that £200 from the annual cost of staying and assume your existing tariff is £200 cheaper.

It's your account balance, not a tariff discount.

And what happens if you owe money?

Similarly, switching supplier doesn't necessarily make money already owed disappear.

Debt relating to energy you've already consumed is separate from whether another tariff is cheaper for your future consumption.

This is exactly why comparing the decision rather than just two monthly payment numbers matters.

What should you compare?

When evaluating another tariff, try to separate:

Consumption

• electricity kWh

• gas kWh

Tariff

• unit rates

• standing charges

• tariff term

• exit fees

Account

• current credit or debit balance

• current Direct Debit

Then ask:

What would each tariff cost using the same reasonable consumption estimate?

That gives you a cleaner comparison.

Afterwards, you can consider what the monthly payment means for your budget and how any existing credit or debt needs to be dealt with.

Your monthly payment still matters

None of this means Direct Debit is unimportant.

For most households, monthly cash flow matters enormously.

Knowing whether £120, £150 or £200 will leave your bank account each month is important for budgeting.

But there are two different questions:

Can I afford this monthly payment?

and:

Is this tariff actually cheaper?

Sometimes the same number helps answer both.

Sometimes it doesn't.

Understanding the difference can prevent a lower-looking monthly quote from being mistaken for a saving that isn't really there.

Compare the tariff, not just the payment

Likewise Compare is being built around making these distinctions clearer.

When comparing an energy renewal with other tariffs, the objective isn't simply to put two monthly Direct Debits next to each other.

It's to understand the household's consumption, apply the relevant tariff rates and standing charges consistently, account for relevant fees, and show what the options could actually cost.

Your monthly payment remains useful.

Your account balance remains important.

But neither should be confused with the underlying tariff.

Because:

£140 a month versus £125 a month doesn't automatically mean you're saving £180 a year.

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