If Rates Drop Will Bills Go Up?

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I've been really angered by the way my bill has been calculated. I've written to Energywatch, Consumer Direct Energy and even Watchdog, but i've not had a sustantive response from any of them.

Perhaps this matter's been raised here before, but i thought i'd have my twopennorth. Someone please tell me what i'm missing and why i am not being ripped off.

I use E.on, who charge two rates each quarter: a primary rate and a secondary rate.

For electricity, the primary rate is charged until i reach the quarterly threshold of 225kWh. Then a secondary rate (about 1/3 the primary rate) is applied to the balance of my usage.

When they put up my charges mid-quarter, i had alrady reached my threshold. But instead of applying the increase to the balance at the new secondary rate, they apportioned my threshold pro-rata - before and after the increase - and charged me partly at the new primary rate. That seems to me to represent a 'double whammy' and to be completely unfair.

The same principal applies to gas; applying increases this way must net E.on (and doubtless other providers) millions of pounds.

The utter absurdity of this method would be brought more sharply into focus if we were ever to see a reduction in fuel charges. Surely, using this system could actually INCREASE costs over the first quarter rather than reduce them!
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Comments

  • KimYeovil
    KimYeovil Posts: 6,156 Forumite
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    I don't understand - from the 4th and 5th paragraph you seem to be saying they have done things correctly and fairly! And this is bad?

    Say its 225 kwh over the quarter and the split was half way - have they charged 112 at the old and 112 at the new? Or are you saying they have pulled an npower and have tried to redefine a calendar quarter and are trying to charge you 225 over the new quarter in addition to 225 over the first half? What is the total number of tier 1 units they are trying to charge?
  • notbritishgas
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    The quarterly threshhold, in your case 225 for electricity, is apportioned on a daily basis. There are 91 days in a quarter, so divide 225 by 91 = 2.5.
    So if the price increase comes after 20 days of the quarter they will charge 50 primary units at the old rate and then 175 at the new rate.
    You do not use all of the primary units first and then go on to the secondary rate. You have not been ripped off!
  • ortolickus
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    Hi KimYeovil - i dont' think you understand the point i'm making. It's much more than 225 units i used over the quarter. I had used over 225 units BEFORE the rate increase.

    That's it notbritishgas. It's apportioned on a daily basis when there's a price rise so they can charge you at the primary rate, even though you've already used the threshold number of units. My point is that i'd already used my quarter's primary units, and if there hadn't been a price rise ALL the rest of the bill would have been charged at the lower secondary rate, albeit an increased one.

    Take a rough example where 450 units are used over a quarter, with a 10% rate increase halfway through when 225 units have been used.

    Primary rate =23p secondary rate = 9p
    No increase:
    quarterly bill = 225x 23p = 51.75 + 225 x 9p = 20.25
    Grand Total of £72
    If the price increases by 10% after the 225 units threshold has been used:
    Quarterly bill = 225x 23p = 51.75 + 225 x 9.9p = 22.27
    Grand Total of £74.02
    But by E.on's method:
    Increase 10% after 225 units used
    Quarterly bill = 112.5 x 23p = 25.87 + 112.5 x 9p = £36
    PLUS 112.5 x 25.3p = 28.46 + 112.5 x 9.9p = 11.14 = £39.60
    Grand total of 75.60
    So instead of rising by £2.02 over half a qauarter, the bill goes up by £3.60

    I think my point about bills going up while prices come down was a fallacy though :-(
  • KimYeovil
    KimYeovil Posts: 6,156 Forumite
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    Orto keep-your-tongue-to-yourself,

    I thought Nbg and I said the same thing?

    The standing charge is there to pay for the entire quarter's standing charge. If the standing charge changes half way through, then the total standing charge changes.

    Have a [STRIKE]read[/STRIKE] skim of Direct Debacle's thread and then see if you still think that E•on are being unfair.
  • brysiewysie
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    As previously said you're not being ripped off. You are charged daily primary units of approx 2.5 per day. If your bills are 91 days apart you get charged 224 or 225 primary units, apportioned at the correct rate for any price increase or decrease. Everything else is at the secondary rate and again apportioned and pre and post price change rates.
  • Cardew
    Cardew Posts: 29,038 Forumite
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    Another way of looking at the situation is to consider what happened before the tier1/tier2 tariff structure was introduced.

    We all paid a daily standing charge of xxp and one flat rate for all electricity and indeed there are still tariffs that retain that structure.

    So if the daily standing charge increased from, say, 20p to 22p after 45days of a 90 day quarter you would expect to pay an increased standing charge in that quarter of £18.90 instead of £18.

    As explained above that is exactly what has happened in your case with the increase in standing charge applied to a Tier1/tier2 charging structure.

    Incidentally 'quarterly' bills are never for an exact quarter(91.25 days!!), so if you got a bill covering 100 days you would be charged for 246 tier 1 units.
  • ortolickus
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    Thanks for the replies. It seems i got the maths about right or someone would have pointed it out.

    So it boils down as to whether the threshold (it's not a 'standing charge') is a daily or quarterly apportionment. On my corespondence from E.on it refers to a "quarterly" threshold, not a "daily" threshold, so i still believe that any price increase applied after i've reached that threshold during a quarter should be at the secondary rate.

    I follow the arguments that have been offered against my standpoint, i just don't happen to agree with them.
  • MarkyMarkD
    MarkyMarkD Posts: 9,912 Forumite
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    Fine, but you are wrong.

    They express the threshold as a quarterly amount, but it's in fact a daily amount.
  • fatlad1971
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    ortolickus wrote: »
    Hi KimYeovil - i dont' think you understand the point i'm making. It's much more than 225 units i used over the quarter. I had used over 225 units BEFORE the rate increase.

    That's it notbritishgas. It's apportioned on a daily basis when there's a price rise so they can charge you at the primary rate, even though you've already used the threshold number of units. My point is that i'd already used my quarter's primary units, and if there hadn't been a price rise ALL the rest of the bill would have been charged at the lower secondary rate, albeit an increased one.

    Take a rough example where 450 units are used over a quarter, with a 10% rate increase halfway through when 225 units have been used.

    Primary rate =23p secondary rate = 9p
    No increase:
    quarterly bill = 225x 23p = 51.75 + 225 x 9p = 20.25
    Grand Total of £72
    If the price increases by 10% after the 225 units threshold has been used:
    Quarterly bill = 225x 23p = 51.75 + 225 x 9.9p = 22.27
    Grand Total of £74.02
    But by E.on's method:
    Increase 10% after 225 units used
    Quarterly bill = 112.5 x 23p = 25.87 + 112.5 x 9p = £36
    PLUS 112.5 x 25.3p = 28.46 + 112.5 x 9.9p = 11.14 = £39.60
    Grand total of 75.60
    So instead of rising by £2.02 over half a qauarter, the bill goes up by £3.60

    I think my point about bills going up while prices come down was a fallacy though :-(

    you have written to Energywatch, Consumer Direct Energy and even Watchdog about a disputed £1.58 on a half quarterly bill
    are you Scottish by any chance ?
    (no offense meant to any Scottish posters)
    blow me you must have spent that on stamps never mind the time involved :rotfl:
  • iamesbo
    iamesbo Posts: 258 Forumite
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    fatlad1971 wrote: »
    you have written to Energywatch, Consumer Direct Energy and even Watchdog about a disputed £1.58 on a half quarterly bill
    are you Scottish by any chance ?
    (no offense meant to any Scottish posters)
    blow me you must have spent that on stamps never mind the time involved :rotfl:

    Whats wrong with that?
    If nobody complains about overcharging the crooks will get away with it, and who would want a situation like that, apart from a similar crook?
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