EON increases monthly Direct Debit by 40%

doveman

I received a letter today informing me that EON would be increasing my monthly direct debit from £33 to £46 a month, an increase of nearly 40%.

Certainly my usage patterns haven't changed, so I can only assume this is in anticipation of them increasing their charges later this year.

My consumption last year would have cost me £453 at current prices on EnergyOnline Extra Saver v3 (after my total discounts of 21%) and I've calculated that switching to Price Protection v16 would cost me £565/year (after 9% discount). The main reason I didn't switch to v15 was because I didn't feel I could afford the increased monthly payments, but as this has been forced on me now anyway, I guess I might as well switch and get the benefit of having prices fixed until October 2009.

Having said that, the only thing stopping me considering seperate suppliers for Gas and Electric is the fact that some of the discounts on my current tariff only apply if I take both from EON. If I'm going to lose these by switching to Price Protection anyway, it's a good opportunity to see if I'd be better off with seperate providers. I wonder if EON thought of this!

Cardew

I don't think it is normal practice to increase a DD payment in anticipation of any future rise.

The more normal reason would be that your current DD is not sufficient to cover your present consumption.

You say your consumption was £453 that is £37.75 a month.

As you were paying £396(£33 a month) you will presumably have a debit balance built up.

Presumably the £46 is for the £37.75 plus paying back your debit balance - well at least that is the normal reason.

doveman

You're quite right that £33/month wouldn't cover £453/year, so it would be understandable to increase my DD to £37.75. Note that I said my consumption last year would have cost £453 at current prices, not that my usage was £453 last year.

Whilst I do currently have a debit, it's only £79 and I had a debit of £51 at this time last year. Over a year, the payments covered my usage, so I can't see a good reason for the extra £8.25/month increase.

magsg2963

as an agent for one of the other big 6 energy providers.it is normal practice to divide outstanding bal by either 3 or6 months to take back debit on account .this is then applied to new dd amont and reviewed after three months if consumption is not increased and you build up credit on account.this would be reduced at next reaassessment.

doveman

Fair enough, although they've never done this when I've had a debit in the past, so it still seems suspicious to me

wakeupalarm

magsg2963 wrote: »

as an agent for one of the other big 6 energy providers.it is normal practice to divide outstanding bal by either 3 or6 months to take back debit on account .this is then applied to new dd amont and reviewed after three months if consumption is not increased and you build up credit on account.this would be reduced at next reaassessment.

All good in theory but in practice they never reduce the DD amounts and you end up with a massive credit balance which the energy companies do not refund automatically.

Cardew

wakeupalarm wrote: »

All good in theory but in practice they never reduce the DD amounts and you end up with a massive credit balance which the energy companies do not refund automatically.

By far the biggest complaint is that DDs are too low and the companies have allowed huge debit balances to build up that the customer has difficulty in paying off.

The Regulator has stated that the debit balances outweigh the credit balances and the companies are owed more money than they owe.

The companies are not allowed to make money by running up overal credit balances - they undoubtedly would if they could.

Some companies do refund credit balances automatically - BG for example.
They also reduce the DD - I have 4 accounts and 2 were reduced last year, without me asking. In fact it went too low and they have just increased one back to a hiher level than it was originally.

There is much scope for criticism of all the Utility companies - particulary the quality of their accounting and over-reliance on 'The Computer' - but IMO the above is not a criticism that can be fairly levelled.

The OP is being asked to pay £8.25p a month more than the estimated consumption - to pay off that debit, it seems quite reasonable to me.

doveman

Just some corrections/additional info.

The new DD is actually £49/month not £46/month, so £11.25 over and above what I reckon is needed to cover my annual usage.

My consumption of both Gas and Electric has been much the same over the last year as it was the year before that.

My monthly DD was £37 most of last year but was automatically reduced to £33 in October 2007. I do wish that EON would recalculate it when they raise prices though, as this would have helped me avoid building up quite so large a debit.

SwanJon

doveman wrote: »

I can only assume this is in anticipation of them increasing their charges later this year.

Cardew wrote: »

I don't think it is normal practice to increase a DD payment in anticipation of any future rise.

It's not normal practice as it would open the company up to incredible insider trading.
The suppliers need to announce any chnage that could affect the shareprice (such as a price rise) to the stockmarket first. [At least, those on the UK stock market, not sure about the others, esp those 70% government owned.]
If they programmed a price rise into the system before it was announced any employee could see that date and size of that rise in advance and act on that information.
The vast majority of employees (i.e. those we all speak to) find out after the stockmarket, so pretty much the same time as everyone else.

Speckled_Egg

Hmm......

I got a letter from E-ON today telling me my direct debit will be increased to £65.00 per month. I wouldn't mind but it has risen from £22 to £40 to £48 within 18 months and I live in a one bedroom flat! What is going on?!

:eek:

The only change is my boyfriend moving in just over a year ago but I can't see it would make that much of a difference.

Hillfly

Count yourselves lucky - my DD just went up from £59/month to £129/month!