Direct Debit Algorithms

Cardew

There have scores of posts on MSE complaining about huge increases in Direct Debit payments.

The reasons are inevitably a debit balance built up because the DD was not set high enough and/or under-estimated meter readings. The increase is to set a correct level of payment to cover future outgoings, and to recover that debit balance.

However I am wondering if there has been a change in the way DD payments are calculated – i.e. a change to the computer algorithm.

For many years my DD payments were predictable and provided my consumption remained reasonably consistent, they increased by the same percentage as any gas and electricity rise. The same applied to telephone, water etc.

Now I have been on a fixed rate tariff for gas and electricity for the past 3 years and my consumption for all 4 accounts(2 gas, 2 electricity) has remained constant. So one would think that would be a perfect case for keeping the DDs at the same level. - Not so.

To take one electricity account as an example:

3 years ago I was paying £47.50 monthly, which was just about right and covered the annual bill.

It remained like that for nearly 2 years and then, for no apparent reason it was reduced to £35.

Now as expected this has meant a debit balance has built up, and unsurprisingly this month the DD has increased by over 50% to £53.

Obviously I am aware that I could have contacted the Utility company and insisted that the DD remain at £47.50 but I am perfectly happy for them to reduce my DD at any time as it is in effect an interest free loan!!

Equally obviously I am aware that this 50% increase is justified, but I suspect it might not be understood by many customers.

However I am at a loss to know what triggered the reduction from £47.50 to £35.

To a lesser extent this has happened with my other accounts.

Indeed the DD for my water supply - which sadly is not on a fixed tariff!! – inexplicably dropped from £33 to £25 last year. Again, no reduction in consumption and prices have increased 5% - so another large jump in DD is in the offing.

Have any utility company employees or computer ‘nerds’ any insight into the reasons?

brysiewysie

Who's your supplier?

Eon changed their DD system in April this year to one that calculates the DD to create a zero balance in the spring quarter (April, May or June bill). With the recent price increases and the higher winter use for most it will create some larger DD increases to get accounts to zero in that period.

Cardew

brysiewysie wrote: »

Who's your supplier?

Eon changed their DD system in April this year to one that calculates the DD to create a zero balance in the spring quarter (April, May or June bill). With the recent price increases and the higher winter use for most it will create some larger DD increases to get accounts to zero in that period.

I am with BG on their fixed to April 30 2010 tariff, which started in late 2005.

Joyful

I believe there was a system hiccup Cardew because mine did the say and reduced me from £23 to £8! Luckily I caught it after 2 months and changed my amount to catch up. If I remember there was quite a few around that time.I think it was when they decided to check every 3 months instead of 6 to stop people getting into debt with all the price changes. That is why people need to take responsibility to check they are paying the correct amount for usage.

Cardew

Joyful wrote: »

I believe there was a system hiccup Cardew because mine did the say and reduced me from £23 to £8! Luckily I caught it after 2 months and changed my amount to catch up. If I remember there was quite a few around that time.I think it was when they decided to check every 3 months instead of 6 to stop people getting into debt with all the price changes. That is why people need to take responsibility to check they are paying the correct amount for usage.

It is one thing to correct estimated meter readings, but Mr and Mrs Average would not have a clue if their DD was set to the correct level - and why should they?

The Utility companies commission multi-million pound computer systems, with supposedly sophisticated computer programs to ensure that the DD payments cover the annual outgoings - given normal circumstances(i.e. no dramatic change in consumption)

The result of your 'unjustified' reduction from £23 to £8, and mine from £47.50 to £35 would inevitably lead to a huge increase in DD payments, which would doubtless cause many people hardship.

If it was a 'glitch' I wonder why it took a year in my case to correct.

My gut feeling is that the computer program has not yet been sorted.

lincs123

With the fact that EON now calculate the Direct debit to be zero after the spring bill it means you will always be in credit. While on the face of it getting 8% is a good investment return if this credit makes you go overdrawn then it may be costing you more than the saving!

1carminestocky

I read recently that BG are suing the people who supplied their super duper (and super expensive) new computer system as, not to put too fine a point on it, it doesn't work. I'm sure this is one of the problems that will be highlighted by BG's lawyers in any litigation...