British Gas prices to rise by up to 60%??????

KimYeovil

backfoot wrote: »

Kim,

The point is that I could accept that after the next Click 5 increase,the DD may have to go up,certainly for electricity and perhaps only a bit for gas given his existing substantial credit.

To be holding their rate down and increasing DD's at the same time is out of order.

You know these are vulnerable elderly people and they shouldn't have to worry or wonder why something is happening when it doesn't need to.

Backfoot, I completely agree with you. I think it crazy and wrong this abuse of direct debits to stockpile cash. But 1Carmine and others think it is an eminently sensible way to 'help' consumers manage their cash. It is not me defending their actions.

KimYeovil

paulonline123 wrote: »

I find the lack of reasoning in a lot of these posts to be a little frightening tbh.

[... sensible stuff snipped ...]

Now don't start with the citing high-falutin' facts and informed opinion. That really is out of context in this thread.

1carminestocky

KimYeovil wrote: »

Backfoot, I completely agree with you. I think it crazy and wrong this abuse of direct debits to stockpile cash. But 1Carmine and others think it is an eminently sensible way to 'help' consumers manage their cash. It is not me defending their actions.

What?? I genuinely didn't think it possible after last night's weird utterances, but your posts are if anything becoming even more bizarre...

backfoot

paulonline123 wrote: »

I find the lack of reasoning in a lot of these posts to be a little frightening tbh.

You seem to be under the impression that businesses and their employee's deliberately lie to customer's in an institutional manner and have systems deliberately put in place to rip off the customer.

TBH I don't think there is any lack of reasoning.

The Original Poster received a cold call pressurising them into switching to the fixed rate product using false information. They objected to this enough to write their very first post on this forum.The product itself will stand or fall based on the future movement of prices, a very uncertain outcome,depending on many factors.I think the objection arises because selling energy over the phone raises many questions about the controls that can be exercised effectively of such salespersons. The long standing problems of doorstep selling showed how dangerous this can be and now to shift it to the medium of the phone is very alarming to me.My mother was a victim of a doorstep seller and I don't want to think or worry about BG or anyone else trying to confuse her,deliberately or not.

I note that you didn't address the issue I raised about increased DD's when we switched to a much cheaper tariff. Perhaps you would care to point out any lack of reasoning in my objection to that?

paulonline123

backfoot wrote: »

TBH I don't think there is any lack of reasoning.

I note that you didn't address the issue I raised about increased DD's when we switched to a much cheaper tariff. Perhaps you would care to point out any lack of reasoning in my objection to that?

Glad you asked.

A direct debit can be one of two things with energy companies, fixed or variable.

Fixed is a set amount based upon your usage. It stays at that amount if you use less or more and will change only on your say or based upon a change of tariff. This is great if your usage stays the same as the previous year it was based upon or prices don't change; however if something does change (and very often it does) this may leave you heavily in credit or more often debit.

If this is the case you may find your direct debit increasing more than it needs to because it was incorrectly set initially. This is a method used by companies such as nPower and E.on and many of the other smaller suppliers.

In 2006 Energy watch stated this type of direct debit is irresponsible as it allows a customer to set an amount that they consider is correct, even if a supplier knows that this is going to leave them in debt.

In response to this many suppliers opted for a variable direct debit method as an alternative, British Gas decided that the only method of direct debit they will use is variable (although if you specifically ask they will give you a fixed DD).

A variable direct debit is based upon your usage and your tariff. I'll give you an example, and the figures here are obviously wrong but are illustrative.

Mr Smith used in 2007 120 pounds. He wanted a direct debit and as at the time prices were not known to be changing a direct debit was set up for 10 pounds a month.

Six months down the line and at this point Mr Smith was projected (based upon previous consumption) to have used 30 pounds, his winter period a lot heavier, and so would be 30 pounds in credit.

In fact at this point Mr Smith had used 36 pounds. His usage at this point was 20% more than previous. At this level of usage it would be expected that he would use 144 pounds in a year. As he is six months into his scheme he would have only paid 60 pounds out of that 144 pounds of expected usage meaning that his direct debit for the remaining six months would need to be (144 - 60)/6 or 14 a month.

My gas bills has gone up 40% cries Mr Smith! But as you can see that's not true.

Now to be specific about your query.

Imagine Mr Smith six months down the line had decided to go for Click 5 and for illustrative purposes lets say its 10% cheaper.

He would still have used 36 pounds in six months. As his tariff had fallen by 10% this would mean that he would have 108 pounds to pay minus the 10%, lets call it 97 pounds, and then deduct his credit from that 67 pounds, and that would be paid over six months or 11 pounds a month.

A 10% increase even though I was told this tariff was cheaper? Ripoff Britain cries Mr Smith.

A direct debit is not a method of paying your bills, its a method of saving money so you can use that to pay your bills.

And that is why despite Click 5 saving you money your direct debit may rise when you go on the tariff. Simply, it was going to rise more than it did anyway and your tariff change forced a reassessment and caught it earlier.

Note that in both of these cases if the DD had been fixed you would be in debit at the end of twelve months.

Without the change to Click 5 at the end of twelve months you would be 24 pounds in debit and your expected usage would be 144 pounds.

That would mean over the next twelve months you would pay 168 pounds, 14 a month or a 40% increase in your direct debit.

Suppliers are not altruistic by any means but they have systems in place to prevent you from going into debt which is no good for you or them. The idea that they deliberately set direct debit policy to rip people off is something I have to battle with for 70% of my day and is plainly false.

YES sometimes direct debits are set wrong but in 100% of the case this is because the information held by the supplier is wrong, an incorrect read, a date for billing, its always the information that's entered that's at fault and not the calculation method itself.

backfoot

Thank you for your response. It is ,however,truly baffling and I think flawed in many respects.

paulonline123 wrote: »

Glad you asked.

A direct debit can be one of two things with energy companies, fixed or variable.

Fixed is a set amount based upon your usage. It stays at that amount if you use less or more and will change only on your say or based upon a change of tariff. This is great if your usage stays the same as the previous year it was based upon or prices don't change; however if something does change (and very often it does) this may leave you heavily in credit or more often debit.

If this is the case you may find your direct debit increasing more than it needs to because it was incorrectly set initially. This is a method used by companies such as nPower and E.on and many of the other smaller suppliers.

In 2006 Energy watch stated this type of direct debit is irresponsible as it allows a customer to set an amount that they consider is correct, even if a supplier knows that this is going to leave them in debt.

In response to this many suppliers opted for a variable direct debit method as an alternative, British Gas decided that the only method of direct debit they will use is variable (although if you specifically ask they will give you a fixed DD).

I don't recognise this at all. Nearly all monthly payments are made by fixed monthly direct debits. Some people pay quarterly based on consumption/bill and that can be by quarterly variable direct debit.

A variable direct debit is based upon your usage and your tariff. I'll give you an example, and the figures here are obviously wrong but are illustrative.

Mr Smith used in 2007 120 pounds. He wanted a direct debit and as at the time prices were not known to be changing a direct debit was set up for 10 pounds a month.

Six months down the line and at this point Mr Smith was projected (based upon previous consumption) to have used 30 pounds, his winter period a lot heavier, and so would be 30 pounds in credit.

In fact at this point Mr Smith had used 36 pounds. His usage at this point was 20% more than previous. At this level of usage it would be expected that he would use 144 pounds in a year. As he is six months into his scheme he would have only paid 60 pounds out of that 144 pounds of expected usage meaning that his direct debit for the remaining six months would need to be (144 - 60)/6 or 14 a month.

My gas bills has gone up 40% cries Mr Smith! But as you can see that's not true.

Ok so you have made the point about seasonality and assumed consumption has risen in your example.My case is for consumption based on previous years and is not expected to rise.

Now to be specific about your query.

Imagine Mr Smith six months down the line had decided to go for Click 5 and for illustrative purposes lets say its 10% cheaper.

He would still have used 36 pounds in six months. As his tariff had fallen by 10% this would mean that he would have 108 pounds to pay minus the 10%, lets call it 97 pounds, and then deduct his credit from that 67 pounds, and that would be paid over six months or 11 pounds a month.

A 10% increase even though I was told this tariff was cheaper? Ripoff Britain cries Mr Smith.

Yes because in your example you have erroneously chosen to raise consumption patterns. What we have is a significant drop in unit charges (approaching 30%) combined with a dual fuel benefit.The gas account is over £100 in credit easily negating any seasonality credit and the electricity is a more level consumption throughout the year.

A direct debit is not a method of paying your bills, its a method of saving money so you can use that to pay your bills.

Sorry but that's just a silly statement. You are talking about seasonality again.

And that is why despite Click 5 saving you money your direct debit may rise when you go on the tariff. Simply, it was going to rise more than it did anyway and your tariff change forced a reassessment and caught it earlier.

Note that in both of these cases if the DD had been fixed you would be in debit at the end of twelve months.

Without the change to Click 5 at the end of twelve months you would be 24 pounds in debit and your expected usage would be 144 pounds.

That would mean over the next twelve months you would pay 168 pounds, 14 a month or a 40% increase in your direct debit.

Suppliers are not altruistic by any means but they have systems in place to prevent you from going into debt which is no good for you or them. The idea that they deliberately set direct debit policy to rip people off is something I have to battle with for 70% of my day and is plainly false.

There is no logic in my case for a rise in direct debit either on the gas or electricity account until such time as BG raise the Click 5 charges. You are defending the indefensable. I think you may have been brainwashed in the BG corporate speak.

YES sometimes direct debits are set wrong but in 100% of the case this is because the information held by the supplier is wrong, an incorrect read, a date for billing, its always the information that's entered that's at fault and not the calculation method itself.

The DD previously used was about right for the standard tariff, if not a little high on gas and maybe a touch low on electricity. The switch from standard to Click 5 should have allowed the next price hike to be absorbed.BG have upped the charge to gain benefit in cash flow without any good reason other than for their benefit.

Cardew

backfoot wrote: »

I don't recognise this at all. Nearly all monthly payments are made by fixed monthly direct debits.

If I can make a comment - and I think Paulonlines's post was excellent!

I think some of the confusion is in terminology of what constitutes a fixed and variable direct debit.

Most Direct Debits are variable. That does not mean that amount of the DD changes constantly, and in fact if the estimate of annual consumption was correct in the first place it will not change between annual reviews - so you could be forgiven for thinking it is fixed.

I have been on a fixed price tariff(on 4 accounts) with BG for nearly 3 years and my consumption is fairly constant. Even though I have a variable DD my payments have remained a fixed amount each year. On one account at the annual review it was increased slightly.

On a variable DD you give the Utility firm authority to vary the amount of the DD as they see fit. The only stipulation is that they must give you advance notification of any increase.

backfoot

Cardew wrote: »

If I can make a comment - and I think Paulonlines's post was excellent!

I think some of the confusion is in terminology of what constitutes a fixed and variable direct debit.

Most Direct Debits are variable. That does not mean that amount of the DD changes constantly, and in fact if the estimate of annual consumption was correct in the first place it will not change between annual reviews - so you could be forgiven for thinking it is fixed.

I have been on a fixed price tariff(on 4 accounts) with BG for nearly 3 years and my consumption is fairly constant. Even though I have a variable DD my payments have remained a fixed amount each year. On one account at the annual review it was increased slightly.

On a variable DD you give the Utility firm authority to vary the amount of the DD as they see fit. The only stipulation is that they must give you advance notification of any increase.

It may have been excellent in relation to someone whose consumption is expected to rise or someone who starts off with only a small credit balance or none at all during the summer months,but it bore no resemblance to the case I was talking about.

I am not confused at all about fixed or variable direct debits. I am talking about the terminology of payment methods and in our case it would be deemed a fixed montly direct debit. Of course, should circumstances change,price changes, consumption changes,then it follows that the DD will change and to that extent the supplier has authority via the variable direct debit to do so.

The key point,that neither of you had addressed is what caused BG to raise the DD's? I am certain you will not find find a plausible answer.It doesn't matter what label you want to give to the mechanism of payment,they have raised the annual amount collected when the charges have actually dropped by over £200.

1carminestocky

backfoot wrote: »

It may have been excellent in relation to someone whose consumption is expected to rise or someone who starts off with only a small credit balance or none at all during the summer months,but it bore no resemblance to the case I was talking about.

I am not confused at all about fixed or variable direct debits. I am talking about the terminology of payment methods and in our case it would be deemed a fixed montly direct debit. Of course, should circumstances change,price changes, consumption changes,then it follows that the DD will change and to that extent the supplier has authority via the variable direct debit to do so.

The key point,that neither of you had addressed is what caused BG to raise the DD's? I am certain you will not find find a plausible answer.It doesn't matter what label you want to give to the mechanism of payment,they have raised the annual amount collected when the charges have actually dropped by over £200.

I too noticed the complete lack of any attempt at an answer to this point . It *clearly* is not acceptable that this has happened IN THESE CIRCUMSTANCES. But of course, I have no connection (directly or indirectly) with the energy industry.

Cardew

backfoot wrote: »

I am talking about the terminology of payment methods and in our case it would be deemed a fixed montly direct debit. Of course, should circumstances change,price changes, consumption changes,then it follows that the DD will change and to that extent the supplier has authority via the variable direct debit to do so.

Backfoot,
I was talking in general terms about it being an excellent post and have not looked at the specifics of your case as Paulonline was answering your query - if not to your satisfaction.

I am a little confused about your quote above. If it is "deemed a fixed monthly direct debit" then it cannot be changed by the supplier as he does not have the authority of a variable direct debit to do so??

Incidentally you took issue with Paulonline about this statement:

A direct debit is not a method of paying your bills, its a method of saving money so you can use that to pay your bills.

Surely that is accurate! He is simply stating that the amount you pay by DD does not settle your bill, it simply is placed in an account(albeit with the supplier) and will be used to pay for all or part of the bill, and indeed may generate a surplus that is returned to the customer(or used to offset payments the following year.)