Energy Companies Allegedly Misuseing Direct Debit Scheme

chrisinyorks wrote: »

Direct debits are increased to ensure your balance is Zero after your largest consumption quarter.
This was stated by Mr Russell Hamblin-Boon anEnergy Retail Association Spokesman yesterday.

And this is where all the current increases are coming from. The calculation has always been annual usage amount divided by 12= monthly dd payment.

The key difference now is that they are trying to balance the account at the end of the winter billing period Mar/Apr/May instead of at the end of 12 months from when you joined your current supplier.

The suppliers seem to have realised they were allowing customers to go into massive debt and have now decided at the most inappropriate time to force customers into building up a balance first and then draw this down so the account is clear at the end of winter.

Ofcourse this is how the DD scheme was supposed to work, it's just taken the energy companies 10 years to figure it out. :eek:

Joyful wrote: »

For all those that talk about companies making money from Direct debits I think this quote from Phil Bentley on TV this week says it all!

"Last month our direct debit customers were in credit by around £34 million, but by March next year this will have turned into a debit of £460 million. Direct Debit is a monthly payment method designed to smooth payments over the year."

Take care with Phil Bentley predictions, Derren Brown he aint. Less than 4 months ago he was telling anyone who'd listen that "The simple fact though is that we have entered an era of unprecedented high world energy prices.". Err, no.

brysiewysie wrote: »

Why should suppliers set a review at summer or early winter? Eon give an 8% discount typically for the benefit of the customer. Where's the benefit to Eon if the DD scheme creates debt and credit in equal measure over the year? Suppliers struggle with the amount of debt customers create particularly when they then default. Customers have a choice about payment methods, if they don't like DD schemes there are sevearl alternatives.

There's absolutely nothing hidden about the Eon DD scheme, I've posted several times the principle of it which is very simple. Previous usage, current prices, add or subtract current balance, number of payments to next review date - easy isn't it?

You do work for them of course.

This is mission creep. When DD schemes were first introduced, they were described as 'spreading the cost evenly throughout the year' - which to me means a balance of arrears and credit over any 12 month period.

What is hidden is the change of purpose of the scheme from levelling monthly payments to becoming a savings scheme. Perhaps there should be 2 DD schemes, with different levels of discount - a basic levelling scheme which aims to keep equal credit and arrears across the year and a forward savings DD scheme - with different discounts.

But there is no doubt in my mind that the purpose of the DD scheme has changed - without being transparently declared. What you say above is effectively an admission that eon is operating a savings scheme with a net cash surplus which is always in eon's favour.

I don't care how many times you post the principle, you are not speaking officially on behalf of eon and no one can dispute with eon saying 'But brysiewysie on MSE forums said....'. it is eon who need to publish it and you should be posting a link to it on eon's site before what you say counts for anything.

Customers are written to telling when the review date is. Consumption data is available online to online customers and I believe from the new year is a requirement that all suppliers include usage info on bills.

There's no unfairness in the DD payments I see at work all day every day, there are of course some accounts with errors but these are a small minority.

And when I challenged my DD payments, JH in eon told me that she could not tell me how the forward sum of £200 odd was derived. When I asked for the kWh figure, she said this was 'calculated by the computer, so we are not able to tell you what it is'.

If you people are going to treat me as being so stupid that I accept that data being on a computer means that it is impossible to access, then you are going to get a hard time.

I have had the same problem with Scottish Power. I switched both my fuels to them in the summer. Knowing my avge. annual kWh usage for both fuels over the last 10 years I arranged my DD to provide a zero balance on the anniversary of my joining date. I am on their fixed price to 2011 and this was before the August price increase. As my income is more or less fixed it is important to me to be able to plan my monthly outgoings. Mid November they notify me that my DD is to be increased by 25%. I contacted them and they explained that they review the DD every three months so the DD needs to be increased to cover the anticipated winter usage. This defeats the whole point of the DD. In effect they are charging quarterly. Quarterly bills are charged in arrears. They are using a DD to pay a quarterly bill in advance. A DD has to be a swings and roundabouts arrangement. At times you are in credit and others in debit but should be even at the end of 12 months.

To be fair thay adjusted the DD back to more or less what it was. There should be no adjustment until 2011 as my usage is more or less known and there will be no price increases to take into account. I expect in 3 months time I will have to go through a similar process with them.

As pointed in the posts above a DD should be for 12 months of equal payments (notwithstanding price increases) and any necessary adjustments made after 12 months. Reviewing a DD every three months is disingenuous and not in the spirit of the arrangement.

Incisor wrote: »

You do work for them of course.

This is mission creep. When DD schemes were first introduced, they were described as 'spreading the cost evenly throughout the year' - which to me means a balance of arrears and credit over any 12 month period.

What is hidden is the change of purpose of the scheme from levelling monthly payments to becoming a savings scheme. Perhaps there should be 2 DD schemes, with different levels of discount - a basic levelling scheme which aims to keep equal credit and arrears across the year and a forward savings DD scheme - with different discounts.

But there is no doubt in my mind that the purpose of the DD scheme has changed - without being transparently declared. What you say above is effectively an admission that eon is operating a savings scheme with a net cash surplus which is always in eon's favour.

I don't care how many times you post the principle, you are not speaking officially on behalf of eon and no one can dispute with eon saying 'But brysiewysie on MSE forums said....'. it is eon who need to publish it and you should be posting a link to it on eon's site before what you say counts for anything.

And when I challenged my DD payments, JH in eon told me that she could not tell me how the forward sum of £200 odd was derived. When I asked for the kWh figure, she said this was 'calculated by the computer, so we are not able to tell you what it is'.

If you people are going to treat me as being so stupid that I accept that data being on a computer means that it is impossible to access, then you are going to get a hard time.

That explains why Brysiewysie is in favour of the energy companies. :rolleyes: